David Hudson

Once you find a home you want to buy, you will need to present the vendor with an Offer to Purchase or Agreement of Purchase and Sale.

An Offer or Agreement Usually Includes:

-your legal name, the name of the seller and the legal civic address of the home;

-the price you are offering to buy the home at;

-the items - other than the home - that will be included in the price (e.g.: window coverings,

-appliances or a satellite dish);

-the amount of the deposit;

-the date you want to take possession of the home;

-a request for a current land survey of the property;

-the date when the offer is no longer valid; and any other conditions that go with the offer, including property inspection and approval of

mortgage financing.

Conditions in the Offer to Purchase May Include:

Home Inspection

It is always a good idea to have the home you are buying inspected by a knowledgeable and

professional home inspector. If the home inspection report identifies any repairs that are needed, you and your real estate agent will have to discuss whether the condition of the home warrants withdrawing your offer to purchase or how these repairs may affect the price you are offering to buy the house for.

For Condominium or Strata Units

To buy a resale condominium or strata unit, you will have to get a satisfactory Estoppel Certificate or Certificate Status (does not apply in Quebec). This should be included as a condition in the Offer to Purchase.

New Home Warranty Programs

Warranties vary from one province to another, but usually they cover labour and materials for eligible items in your new home for at least one year after the construction has been completed. Before you sign a contract for a new home, contact your New Home Warranty Program office for a list of registered builders in your area.

Mortgage Approval

Even if you have a pre-approved mortgage certificate, you must still meet with your bank or credit union during the conditional offer period to get a final mortgage approval.

Once the Offer is Accepted

-Start thinking ahead and making plans:

-If you are currently renting, give notice to your landlord.

-Should you hire a mover or do it yourself?

-Send change of address notices to family, friends, and all the companies that you do business

with.

-Arrange for property insurance.

-Go back to your new home before closing to:

-Measure for window coverings.

-Measure for special-sized furnishings.

-Bring in a tradesperson for a renovation or remodeling estimate.

"The days of ridiculously cheap mortgage rates appear to be over. Now they're just cheap.

A sudden and dramatic jump in rates from Wednesday to Thursday means Canadians looking to break their existing mortgage and refinance at a lower rate may have missed the sweetest spot in recent history. But that doesn't mean people can't still trim their payments.

"We are not going to see these rates again for a while, not in the immediate horizon and maybe never," says Gary Siegle, a Calgary-based manager at mortgage broker Invis. "But rates are still at historical lows. Depending on what your penalties are, there is still money to be saved."

Toronto-Dominion Bank kicked off the hiking party, raising its five-year closed mortgages - the one of the most commonly chosen by Canadian homeowners - by a whopping 0.4 percentage points to 5.85 per cent on Wednesday.

That hike, its biggest in nearly a year, is on top of a 0.2-point increase unveiled last week by TD and several other big Canadian banks. Three other big banks followed in TD's footsteps and raised their posted rates in the last twenty-four hours, and other lenders are expected to follow suit.

With interest rates floating near generational lows, Canadian home owners who locked in last week may have been fortunate enough to negotiate a fixed-rate five-year mortgage as low as 3.65 per cent. "Clients who locked in during the last few months will enjoy the benefits of rates lower than any we have ever seen," says Eric Iankelevic, a mortgage agent with mortgagebrokers.com in Toronto.

Although no one knows where interest rates are headed, the consensus is that they are unlikely to be this low again for a long time.

"These are really emergency interest rates but emergencies do not last forever," says CIBC World Market economist Benjamin Tal. "I do think that interest rates will rise, I don't think it will happen in the very near future but three, four, five months from now they will be higher. Definitely a year from now they will be higher. And in two years, they could be notably higher."

The stunningly low interest rates have led many Canadians to break their existing mortgage and get in at a lower rate. Mortgage brokers say that despite the penalties associated with it, a massive chunk of their recent business has been refinancing existing mortgages. And despite the latest jump in mortgage rates, they don't expect that to change.

Kim Arnold, a mortgage consultant with Dreyer Group Mortgages in Vancouver, says with mortgage rate still well below their historical norm, it is still a good time to look at refinancing.

The decision to break an existing mortgage depends on the penalty, as well as how many years are left on the existing mortgage. It might, for instance, make more sense to break a mortgage with a year left on it as opposed to one with four years left.

"It is not always worth it," Ms. Arnold says. "It depends on the lender and it depends on the penalty."

Penalties for breaking a mortgage loan can be either the greater of three months' interest or the difference between the interest the bank could make on your mortgage as originally arranged versus lending money out at current rates. Most recently the so-called interest rate differential, or IRD, is the larger penalty and the one many lenders use.

All of this is specific to the lender and subject to negotiation. In some cases, banks will do a blended rate, which blends the existing mortgage with the lower current rate. At the end of the day, home owners may or may not end up paying less interest than if they had stuck with their current mortgage.

Mr. Iankelevic says some of the best deals out there are the variable-rate mortgages. Given that the Bank of Canada has said interest rates are likely to remain unchanged until the second quarter of 2010, a variable rate can provide huge savings for home owners who can stomach a little risk."

Roma Luciw is a writer and web editor of the Globeinvestor.com personal finance site. Please send any comments and story ideas to rluciw@globeandmail.ca.

With the wild rate swings that we have seen in the past few days can be quietly attributed to the jump in the 2 and 5 year bond markets. Jumping close to 3% on Monday, this gave the major Canadian lenders a golden opportunity to end the bleeding because of poor yield spreads on the fixed term products.

However a variety of economists agree that we are simply not over this yet. With General Motors declaring bankruptcy and the Canadian economic impact of this is yet to be felt, how many dealership will have there franchises revoked?

With the Bank of Canada staying firm on the prime lending rate (0.50%) how can the institutions continue to keep the fixed terms at these new levels? There is simply too much competition in the marketplace and it is only a matter of months before we see banks dropping rates to remain competitive with another.

Buying a home is one of the biggest financial decisions you will make, so it is important to know your current financial situation to be sure that you buy a home that you can afford.

Get Your Mortgage Pre-Approved

Getting your mortgage pre-approved will let you know what kind of house you can afford. It will make the search for your home easier and less time-consuming.

To get your mortgage pre-approved, you will need:

• Your personal information, including identification such as your driver's license
• Details on your job and proof of your salary
• Information about your bank accounts, financial assets, current loans and other debts
• How much your down payment will be and where the money is coming from
• Proof that you have enough money to cover the costs of closing the sale - usually between 1.5 - 4 per cent of the cost of the house.

Trouble Qualifying for a Mortgage?

Sometimes, after everything has been taken into account, you may find that you can't afford the house you want. If that happens, you may want to:

• Pay off some loans first.
• Save up a larger down payment.
• Revise your target house price.

The Importance of Your Credit Rating

Your credit history gives mortgage providers information on your financial past and how well you have paid your debts and bills. If you have no credit history, it is important to start building one. This can be done, for example, by applying for a credit card. If you have a bad credit history, you can still qualify for a mortgage as long as you have a guarantor - a person who meets the bank's or credit union's requirements, has a good credit history, and can guarantee your loan.

For more home buying tips, contact me or visit CMHC's interactive Step by Step Guide at www.cmhc.ca. CMHC is Canada's largest provider of mortgage loan insurance, helping Canadians buy a home with as little as five per cent down.

For first-time home buyers, all the fees and extra costs beyond what they are paying for their new house may come as a shock. So it's best to know about them upfront to avoid being caught off guard. One of the most common questions asked is, "Do I pay the Realtor?" And the answer to that one is "No." The seller pays this cost, and it's typically a percentage of the selling price. However, the following are the responsibility of the buyer:

• Appraisal Fee. An appraisal is an estimate of the value of the home. Your bank or credit union may require that the property be appraised at your expense. This can range between $250 and $350.
• The Home Inspection fee. A home inspection, which costs around $500, is a report on the condition of your home. You may want to make your inspection a condition of your Offer to Purchase, to make sure you are aware of the condition of the house before you agree to buy.
• Deposit. A deposit is required to ensure that the buyer is serious about purchasing the home. It can form part of your downpayment, but it must be paid when you make the Offer to Purchase.
• Mortgage Loan Insurance Premium. If you have less than a 20 per cent down payment, your bank or credit union may require that you buy mortgage loan insurance. You can add the mortgage insurance premium to your mortgage or pay the full amount when you close the sale of the house.
• Estopple Certificate Fee. This fee costs up to $100, but applies only if you are buying a condominium in a strata unit or condominium and costs up to $100.
• Land Registration Fee. This is charged in some provinces and territories, and while the charge varies depending on the province, it is usually a percentage of the home's price.
• Property Transfer Tax. In British Columbia, you will have to pay a property transfer tax on your purchase, these fees can be waived if you are a first time home buyer if your property falls below the threshold amount of $425,000. If over $425,000 or you do not have the exemption you will be assessed the full tax amount.
• Prepaid Property Taxes and/or Utility Bills. These charges are meant to reimburse the person who is selling the house for amounts already paid for, such as property taxes, filling the oil tank, ect.
• Property Insurance. The insurance covers the cost of replacing the structure of your home and hits contents. Property insurance must be in place on the day you close the sale.
• Survey or Certificate of Location Cost. The bank or credit union may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. This can range in price from $1,000 to $2,000
• Legal Feels. These fees must be paid when the sale is completed and costs a minimum of $500.
• Title Insurance. Your bank or credit union, or lawyer/notary, may suggest insurance to cover any loss caused by any problems with ownership of the property.

Other Costs to Consider

-Appliances

-Gardening Expenses

-Snow Clearing Equipment

-Window Coverings

-Decorating materials

-Hand Tools

-Moving Expenses

-Renovations or repairs

-Service hook-up fees

-Condominium fees (Strata Fees)

Bond Yields Jump Again The 5-year government bond rocketed to 2.71% today. Various lenders have already issued fresh new fixed rate increases. More may follow tomorrow if yields don't retrace.

Two-year bond yields also broke to the upside. That may lead to upcoming rate increases on shorter-term mortgages, which have been insulated from rate hikes for several months.

If you're shopping for a fixed mortgage, be safe and get your application in soon.