It’s a day almost as much fun as getting a cavity filled. It is move in day! You have been planning and organizing this day for months and months. You’ve met with the lawyers, signed the mortgage papers and have the keys. Let the fun begin! We’re here again with James Loewen of Loewen Group Mortgages to talk about the ins and outs of moving day and beyond.
Hi James! We have gone through the gauntlet of home ownership. Money, people, emotions and now the day we’ve been waiting for; move-in day! What advice do you have? What should people expect on move-in day?
Biggest advice I can impart on 1st time buyers (or even repeat buyers) is to stagger your moving dates. Moving – well lets just call a spade a spade – it’s a pain in the ass. Trying to both move in and move out on the same date can be a nightmare should movers show up late or you get your keys later in the day.
If renting presently: set your closing date as the 25th for example and give yourself the remaining days of your rental to get in, clean, paint and set your moving date as the 30th as most all rentals are paid until the end of the month. Should anything not come together in time you still have a couple of days to deal with last minute surprises and a lot less stress.
If you presently own: similarly, stagger your closing dates and we can “Bridge Finance” the down payment between your new purchase and previous home sale date to again give time and reduce stress of trying to both move out and move into a home on the same day.
This will also remove the risk should the person buying your house NOT close on time, it won’t then jeopardize the ability for you to close on your purchase – which frankly happens frequently if they aren’t using a good broker like you are
It’s common for people to move from a smaller space (condo/apartment) to a larger space. They may only have furniture for half the house. Should people spend money and furnish every room right away? Is there a benefit of waiting?
There’s a common theme I’m hoping is coming through on this blog series and that is to BUDGET.
One of the largest mistakes we see with new home buyers is putting every penny they can into the down payment and then having to put home furnishings on high interest credit cards or lines of credit – which then take years to pay off and end up costing far too much with all the additional interest you’ll pay.
You can of course take the “NO payments, NO interest for up to 12 months” that many retailers offer, however be conscious that:
A. there is NO “application fee” being added – I have seen anywhere from $99 to $299 being added to your bill and more importantly,
B. you now need to set a savings budget to ensure you can pay that amount off in the 12 months before its due. You also need to ensure you don’t miss that 1st interest payment if its not paid off in full when the grace period ends. They will usually send you the bill in the mail (potentially to your previous address that you listed on your credit application) and if its missed some stores then have the right to “back charge” you interest on the full year!
Thanks to HGTV, home renovations are extremely popular. What advice do you have for people who want to do home reno’s? How much should people spend? What rooms should people focus on for highest return of investment?
Thankfully we have a program that is accessible to 1st time home buyers (and repeat buyers as well), that with as little as 5% down to be able to “roll” the renovation costs into the mortgage under the purchase plus improvements mortgage (and yes – its even at industry best rates as well!)
This helps many people who find it difficult to save for down payment, closing and moving costs and wish to then avoid putting home renovations onto higher interest credit – which are then difficult to actually pay off.
The program has a few extra steps required to complete before a standard closing but are very straightforward like providing quotes on the work you want completed. We implement the PPI quite frequently and I even used this strategy on my very own home purchase to complete our basement – so we are well experienced and happy to walk our buyers through the whole process. As to the area’s of improvement to focus on: Kitchen, Bathrooms, Flooring, Windows and completing an unfinished basement. The improvements need to increase the value of the home by the amount you’re spending of course, so you want to avoid reno’s such as putting in a skylight or adding a pool which generally don’t affect home value.
Many people don’t budget for home maintenance. How much should people expect to spend on home maintenance? Is there is a certain percentage people should save each month?
We’ve compiled the 10 Common Costs of Home Ownership to assist with setting your budget on your new home. This will of course vary based on the size of your house, age, type (if a condo, semi or detached), lot size and landscaping, as well if the hot water tank / furnace / AC are rented or owned etc. The home inspector will be able to assist you in what repairs might be required immediately and what might require attention in 3-5 years (such as a roof or windows). The general guideline of 1% of the house value per year may sound steep at $5,000 for a $500K home, but you’ll be better to over save than be under prepared. Some of our broker-exclusive lenders will further offer Home Protection Warranty programs (often with the 1st year free) to assist in protecting against unforeseen issues with heating, a/c, plumbing, electrical and more. Ensure you’re asking your broker if they have access to these lenders (sadly, no bank offers these as part of their lending offers on any mortgages.)
Along with a house come utilities. What are the common utilities people need to have set up? How much do they cost per month?
These costs will again vary based on your home value, size and of course personal preference as to temperature you like to maintain in your home. Condo fees if applicable will be set up via your lawyer at closing and come directly from the void cheque you provide. The property taxes you pay on your home will also have the option of being added to your mortgage OR we often highly recommend (and assist) with setting this up directly with the city and happy to review the pro’s and con’s of each option with clients prior to closing.
Utilities you will be responsible for setting up are easily done online with “equal billing” being our general recommended approach, meaning the average monthly bill will be charged equally each month to avoid very high gas bills in the winter to equalize and maintain a constant budget (since your income probably doesn’t increase to offset in the winter). These will include:
Water/Hydro (they are a combined bill due ever 2 months)
Gas, often Union Gas or Enbridge, just search for your area (or Oil)
Cable / Internet
Home Security
Home insurance, which as we discussed earlier will be required before closing.
Thanks James for all of this great advice. Often, when we’re going through the motions of buying a home, it is easy to forget things like home maintenance, utilities and renovations. This can be especially true if you’re buying your first home. We are wrapping things up in our Home Ownership series and down to our final post. This one, unfortunately, is something that we don’t want to plan for; what to do if you separate, get divorced or your partner dies. We often want to shy away from these tough topics, but while the sun is out, its best to plan for a full-on tsunami of crap which could head your way.
