The process of buying a home and car is little different than other countries and this is what I am trying to highlight in the following blog.
It was in September 2017 when I made up my mind to buy a home. I was paying a rent of $1900 for a single family detached home at that time and thought that it would be a wise decision to buy a home. I’ll try to explain quickly how I reached to this decision backed by some calculations as follows.
Since owning a house was costing me close to the amount I was paying on rent, I felt that it was a good decision. I was planning to buy house in the neighborhoods that come under the boundary of the schools which my daughter goes to. As most of the dealings happen through realtors, I met one of those named Sandy, during an open house for a town home. Open house is the term used by realtors when they put up a house, which is on sale, for public viewing and this is done usually during weekends. I visited the town home which was up for sale and we liked the house but since there were some restrictions from the Condo Board about keeping the dogs, we let that go. Then we asked Sandy to show some houses which are detached and don’t have this Condo Board issue. She asked me a few questions such as my budget, a few important things I look for in the house and other similar requirements. I told her that I would prefer a front garage home with walk out basement. After this, the first thing Sandy asked whether I had checked my eligibility to get the mortgage, which I didn’t. She suggested me to take the pre-approval through some mortgage broker first before discussing anything further. As I was a new immigrant and was employed for only a few months, it was very difficult to get the mortgage through any bank. I sent all my documents to the mortgage broker and she informed me that banks and other prime lenders can’t give any mortgage unless I am employed for two years and have filed income tax returns. She tried to arrange the mortgage through some class-2 & 3 lenders and asked me to go ahead. The pre-approval is kind of a willingness from the lender and a go / no go decision is made only after you have finalized a property to buy and already made an offer.
After this pre-approval, Sandy sent me a few house listings through email and I planned to visit to see those homes. One of those I liked and it was the time to make an offer. Now here comes the process part which I felt is quite different. There is a list price of the house which is known to the public and the negotiations don’t happen orally. You’ll not get the chance to meet the owner and you’ll have no clue about the reason for sale. You’ll have to make a written offer with whatever the price you have in your mind and pay a deposit that varies between $5000 to $20,000. The realtor will prepare an agreement, attach your cheque and send the scanned copy of the agreement to the owner. The cheque would be drawn in the name of realtor company and the amount will get debited from your account. The agreement is generally fair and is made in such a way that in case your lender refused the mortgage for some reason or the owner is not ready to sell at the price you had offered, you’ll get your money back otherwise you’ll lose your deposit. So this is what I did, I made an offer, gave a deposit cheque to Sandy and waited for one day for the owner to come back on the price I had offered. The owner refused my offer as it was on the lower side and asked me to make another offer. This happened back and forth and we agreed on a final price. Sandy sent the revised agreement to both the parties and I had sent that agreement to my mortgage broker. The broker came back with some very high interest rates which were higher than what she had communicated to me earlier. I did not want to go ahead and I asked Sandy to cancel the agreement. She did the needful and I got my deposit money back in about a week. Had I got good mortgage rate, I would have bought that house and the only thing remaining was to hire a house inspector, get the inspection done and buy the house.
Later, the mortgage interest rates had gone up and I negotiated my rent with my house owner from $1900 to $1700. Therefore, finally I dropped the idea of buying a house for a few years.
Then in December 2017, I thought of upgrading my car from old Honda Civic to a new SUV. I visited a Car Dealer around third week of Dec. There also, the process of buying was same as I mentioned above. In this case, I could negotiate well because the dealers were trying to clear up their 2017 inventory. I made a quite low offer but as the dealer felt that I was a serious buyer and they were in a hurry to clear their inventory, I got a good deal. So in my opinion, Dec month is a good time to buy a car.