PROVEN Steps to Home Ownership

PROVEN Steps to Home Ownership

Purchasing real estate in Jamaica can be one of the most lucrative asset investments. It is often said that “you cannot lose with block and steel,” and one of the best ways to create wealth is through real estate.? So many Jamaicans, both locally and abroad, dream of owning a “piece of the rock.” Unfortunately, so many of us shy away from buying a home, whether for living or as an investment property, because we just don’t know how to get started and there is often a feeling of intimidation about the process.?

Don’t worry; I am here to help. In this blog, I will share with you the steps you need to take and the documents that are required to have a successful and seamless purchasing journey.? Let’s zone in!

CAN I AFFORD TO BUY A HOUSE?

The first question to ask yourself is, “What can I afford?” If you are a mortgage purchaser, getting pre-qualified with a reputable financial institution is a key step in your purchasing journey.

I encourage you to sit with your mortgage officer and have a discussion before you start searching for your dream home.?

Why?? Getting pre-qualified will offer you guidance on:

1. The price point you can afford;
2. How much money you will need to save for your deposit;?
3. The bank’s closing costs;

The vendor or seller will also require you to present this document. After all, you must be able to prove that you can afford this purchase.

Purchasing real estate will most likely be one of the largest investments you will make in your life, so it is pertinent that you shop around for the best mortgage rates and fees. The current mortgage rates (Jamaican dollar loans) for the NHT are between 0% and 5%; the commercial banks are between 7.95% and 11%; and the building societies are between 10.45% and 11.5%.?

Some banks offer up to 95% financing and will give you up to 35 years to repay. The factors that are taken into consideration are your age, if you are a first-time homeowner, your debt service ratio, and your credit score, among other things.?

If you are a cash purchaser, the Anti-Money Laundering Act stipulates that all monies should go through the bank. Therefore, you are required to provide proof of funds. This is usually accepted in the form of your most recent savings and investment statements or a bank letter. The documents presented should be in your name or the name of your business.

SAVE! SAVE! SAVE!

Yes, you will need money in the bank.? A deposit is a necessity to start the sales process and to show your seriousness. Some vendors request a deposit between 5% and 20% of the selling price of the property, and you will need to show proof that you have cash in the bank.?

Closing costs are another expense that you will need to save for and take into consideration. These are fees that are paid to both the attorney for the preparation of the sales agreement and government taxes. This includes stamp duty (now a flat fee of $5,000), registration fees (0.5% of the market value of the property), and transfer tax (2% of the market value of the property.) Your mortgage lender will also require closing costs, which are usually another 2.5% of the purchase price plus GCT.?

Be sure to speak with your mortgage officer to get the best deal on those fees!

HAPPY HOUSE HUNTING!

Now that you have your pre-qualification letter in hand, and deposit and closing costs covered, start looking for your house or apartment. Be sure to find a passionate and trustworthy real estate sales agent. He or she has the competence and knowledge to guide you while looking for the best property that will suit you and your family’s needs. Be very clear with your agent about needs and clearly establish your deal breakers. The location of the property is key (closeness to work and school, central location to the grocery store, gas stations, restaurants, etc.), size, number of bedrooms and bathrooms, and other amenities.

Here are a few important questions you should ask your agent before viewing a residential property:

• Does the property have 24-hour security?
• What is the monthly maintenance, and what does it cover?
• Is the complex managed by a property manager?
• Are pets allowed?
• How many units are in the complex?
• Is short- or long-term leasing allowed?
• How often is garbage collected?

The search for a home can be a tedious and stressful one but using an excellent sales agent does have its perks. They have access to a larger network of sellers and they can help you negotiate better deals and stay within budget. They even offer emotional support and will be there with you until you receive the keys to your new home.?

In Jamaica, a real estate sales agent will assist in finding a property at no cost to you, the purchaser. The commission paid to the agent is paid for by the vendor, so please be mindful of this.

DO I REALLY NEED AN ATTORNEY?

Using a real estate attorney will make the process of purchasing a home smoother. There are a complex series of steps that an experienced attorney can help to streamline when buying a home. Of course, using an attorney is an additional expense in your budget, but they will protect your interest in the event there are irregularities with the sales agreement or the property you are purchasing.

Once your offer is accepted, the vendor’s attorney will prepare the contract for your attorney to review. Attorneys also conduct checks at the Title’s Office to ensure that the title is in the name of the vendor.? They will also carry out further due diligence to ensure that there are no breaches on the property.?

Yes, I recommend that you use an attorney when purchasing property or land. As they say in Jamaica, “It is better to be safe than sorry.”

Here are a few other important documents that you will need to provide:

Customer Information Form?

The Real Estate Board (REB) stipulates that basic information on the purchaser must be provided to purchase a property. These include full name, civic address, occupation, etc.

Valid Identification?

Driver’s Licenses, Passports, Voter’s IDs, and State IDs are all accepted.

Tax Registration Number?

To purchase property in Jamaica, you must have a TRN. Be sure to visit www.jamaicatax.gov.jm to apply. The process is easy.

Proof of Address?

This is an additional security requirement of the REB where persons conducting real estate transactions must provide a recent utility bill, credit card statement or letter (not dated over 3 months) showing your home address.

Valuation Report?

This will establish a value for the property, a current market value, and a ‘forced sale value’.? It will also help to determine if the purchase price for the property is reasonable. If you are purchasing via a mortgage the bank will require you to present this.

Surveyor’s ID Report?

This is another important document that you will need. This will identify the property that is being sold by using the title. It will address any breaches of restrictive covenants that may exist. In other words, it will tell you if the property is a healthy one.

I know this may seem tedious so it’s important that you do your research and utilize the best professionals to help you on this exciting journey. Be sure to check out our website at www.provenpropertiesltd.com for the best real estate investment options or call us at 876-633-6964.

HAPPY HUNTING!

Contributed by:

Natalie Sawyers

Sales & Customer Service Associate