It’s a day almost as much fun as getting a cavity filled. It’s 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 first time buyers (or even repeat buyers) is to stagger your moving dates. Moving, well let’s 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, especially if the movers show up late or you get your keys later in the day.
If you’re currently renting: As an example, let’s set your closing date as the 25th and give yourself the remaining days to; get into your new home to clean and paint. Set your moving date as the 30th, as most all rentals are paid until the 1st of the month. Should anything not come together in time you still have some time 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. This will give you time and reduce the stress of trying to move out and move into a home in the same day. This will also remove the risk should the person buying your house NOT close in time. It won’t jeopardize the ability for you to close on your purchase. This 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.
Large mistake 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. This can take years to pay off and end up costing far too much with all the interest that’s paid.
You can take the “NO payments, NO interest for up to 12 months” that many retailers offer, however, be conscious of:
A. There isn’t an “application fee” being added – I have seen anywhere from $99 to $299 being added to your bill
B. You need to set a savings budget to ensure you can pay the amount off in 12 months when its due. You also need to ensure you don’t miss the first interest payment. If its not paid off when they send you that mail (potentially to your previous address that you listed on your credit application) some stores then have to 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 renos? How much should people spend? What rooms should people focus on for highest return of investment?
Thankfully, we have a program for first time home buyers, even with 5% down, are able to “roll” the renovation costs onto the mortgage under the purchase plus improvements mortgage (and yes, it’s 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. The program has a few extra steps required to complete before a standard closing. We implement this quite frequently and even used this strategy on my very own home purchase to complete our basement. We are well experienced and happy to walk our buyers through this. As to the area’s of improvement to focus on; kitchen, bathrooms, flooring, windows and finishing an unfinished basement. The improvements need to increase the value by the amount you’re spending, so you want to avoid renos 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 up a home budget. This will vary based on; the size of your house, age, type (if a condo, semi or detached), lot size and landscaping, if hot water tank is 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 then be under prepared. Some of our broker-exclusive lenders will further offer Home Protection Warranty programs (often with the first 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 vary based on your; home value, size, personal preference as to temperature you like to maintain in your home and possibly Condo fees (if applicable). Condo fees 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 at closing.
Utilities can easily be set up online with “equal billing” being our general recommended approach. This means 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). Utilities 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.