TIPS FOR FIRST HOME BUYERS IN JAMAICA

Are you thinking of buying your first home in Jamaica?

This can and should be a very exciting time in your life whether you reside in Jamaica or abroad!

It can also be daunting to think of the prospect of buying your first home in Jamaica given the potential difficulties and complicated legal issues that will inevitably arise during the home purchasing process. One of the best ways to mitigate these pitfalls is to enlist the assistance of a capable Jamaican real estate lawyer at the start of your journey towards home ownership.

Given mynearly twenty years of experience as a real estate lawyer I understand the ins and outs of purchasing a home in Jamaica. As such, I will oversee all legal matters relating to your home purchasing process and will ensure you are being treated fairly by everyone involved in the processfrom the real estate agent to the owner of the home you wish to purchase in Jamaica and all those in between.

It is vital that your home purchasing process runs smoothly and I am here to see to that.

I have participated in many real estate transactions where clients live in Jamaica or in the Jamaican diaspora and as such can provide support and help answer questions thoroughly at any point in the home purchasing process.

I receive so many calls, emails and texts enquiring about the procedure and expenses involved in buying a home or even land on which to build a home that I thought it best to share some tips to help you prepare, manage and complete the home purchasing process without much stress.

1.WHAT CAN YOU AFFORD

What is your realistic budget? Determine your monthly expenses (debts) and income. Then divide the former by the latter to ascertain your debt to income ratio, which should be no greater than 40% before you can secure a qualified mortgage loan from most lenders in Jamaica such as the Jamaica National Building Society (www.jnbank.com).

Remember, you should build some breathing room into your budget so that you can enjoy your new home without it being a source of financial stress.

2.SAVE FOR A DEPOSIT

It is typical for a deposit of at least 10% of the purchase price to be paid at the initial stage of the home purchasing process in Jamaica so you need to save for this. To accumulate your deposit, make a budget, set up automatic savings through your bank account and do something that enables you to earn extra cash.

Of course, the more sizeable the deposit the lower the amount you will need to borrow from a lender.

A smaller mortgage loan means:-

• the less interest you will need to pay over the life of the loan so thousands of dollars can potentially be saved;
• smaller monthly payments means you owe that much less on the home;
• smaller monthly payents means you can more easily qualify for other types of financing for other acquisitions.

So, if you can afford it, consider making a larger deposit.

3.FIND A REAL ESTATE AGENT THAT YOU CAN TRUST

Ask around and/or do your research online to identify a few real estate agents based in Jamaica and more specifically, in the parish or area of Jamaica where you are planning to buy a home who will be by your side to guide you through the process of identifying a prospective home.

Make sure to interview a few to find a real estate agent that can meet your needs.

Ensure for instance that the real estate agent:-

• is responsive not only in the initial introduction phase but also in following up with requested information;
• is punctual at meetings;
• is familiar with the area where you are planning on purchasing your home as he or she should have a good idea of proper expectations and realistic prices.

Remember to lean on your real estate agent for everything about the market in Jamaica such as whether an asking price is appropriate and which are the up-and-coming neighbourhoods. A trusted real estate agent must watch out for your best interest.

4.CHOOSE A LENDER AND GET A PRE-APPROVAL LETTER FOR A MORTGAGE LOAN

In today’s housing market, sellers want to be confident that you will be able to purchase the home if you make an offer. This comfort is provided through a pre-approval letter from a recognized financial institution you approach in Jamaica for a mortgage loan.

When you receive a pre-approval letter, this demonstrates not only that you are financially capable of securing a mortgage loan and are serious about buying a home but also that the financial institution in Jamaica views you as a suitableborrower. Also, you will be in a better position to shop around for a home and negotiate with the seller of same for the best purchase price.

The pre-approval process is simple and it is a free service offered by financial institutions in Jamaica.

Your “total financial health” is looked at – your income against your total debt – so that you know how much you are qualified to spend on a home. You will need to provide certain documentation at the time of application for pre-approval such as:-

• copy of driver’s licence and birth certificate or passport;
• Taxpayer Registration Number (which you can apply for online);
• proof of address;
• income verification letter;
• last two payslips;
• completed credit report form and statement of affairs.

Once these are assessed, you are issued with a pre-approval letter for a mortgage loan which is valid for three months (and is renewable thereafter) and which states:-

• the amount of the loan you qualify for;
• the interest rate on the loan;
• the term of the loan;
• the monthly payment on the loan.

5.FIND THE PERFECT HOME FOR YOU

Do your own hunting by checking homes in Jamaica online within your price range and actually visit them or ask a trusted friend or colleague to do so on your behalf if you are not resident in Jamaica so as to get a feel for your tastes and needs. Your real estate agent can then help you to narrow your search.

6.MAKE A SMART OFFER TO PURCHASE THE HOME

Your real estate agent will be of tremendous help in your decision as to how much to offer for a particular home in Jamaica.

This decision should be informed by numerous factors such as:-

• how long the home has been on the market;
• whether there are existing offers;
• how slow or competitive the market is on a local and national level. For example a small reduction on the asking price can be sought in a slow market but in a hot market, your offer may be turned away if its below the asking price;
• what repairs or renovations you anticipate will be required;
• the age of the home. If it is an older building you should consider the state of the plumbing and electrical wiring, roofing and flooring among other things. One of the most important considerations when purchasing a brand new home is the extent of the liability of the developer for defects that may arise upon occupation.

It is at this time that your pre-approval letter can be presented by your real estate agent so that you are marked as a serious home buyer.

7. RETAIN A REAL ESTATE LAWYER

As I stated before, it is smart to seek the advice of a Jamaican real estate lawyer at the  commencement of your home purchasing journey but certainly, once your offer is accepted by the seller/owner of the home it is even more important to retain one. Your real estate lawyer will be able to guide you on the process involved as well as all the expenses that will be incurred over and above the purchase price of the home.

As with your real estate agent, you should feel comfortable with your real estate lawyer. He or sheshould break down the entire home purchasing process in Jamaica into simple and understandable language so that you are aware of what is going to happen and what will be required from you at each step of the way so that  you can make your arrangements.

Similarly, your real estate lawyer should advise you of all the costs and legal fees involved in the home purchasing process which are:-

• one-half of the seller’s lawyer’s fee to prepare the agreement for sale and GCT on this;
• one-half Stamp Duty which is paid to the government of Jamaica and this is currently $2,500.00;
• one-half of the Registration Fee which is paid to the National Land Agency in Jamaica and this is currently 0.5% of the purchase price;
• one-half of the fee payable to the seller’s lawyer on account of the preparation of the letter of possession and letters to the untilities companies and GCT thereon;
• your real estate lawyer’s fee and GCT on this.

Your real estate lawyer while acting in your best interest will review and explain all documents involved and ensure that the specific terms and conditions you require are covered prior to your signing of same.

Please know and be assured that ALL real estate transactions concerning your first home purchase in Jamaica can be conducted virtually and relevant documents can be sent in their original form to you by way of courier. There is as such no need to travel to Jamaica which is no doubt a welcome relief given the unprecedented times we are living in currently.

You should also know that there are no restrictions on non-Jamaicans purchasing a home in Jamaica and, in fact the government welcomes foreign investment of this kind. Jamaicans and non-Jamaicans enjoy the same rights to home ownership.

Your first home will not only provide you and your family with housing security in Jamaica but it may be your most significant lifetime financial investment. These useful tips should help put you on the path to filling in any gaps in the knowledge you may have of the home purchasing process. Remember that the more you educate yourself about the home purchasing process in Jamaica beforehand, the less stressful it will be, and the more likely you will be to get the home you want for a price you can afford. When the home purchasing process is completed, you will have the confidence that comes from successfully negotiating a major step in your life.

Contact my office to learn more about how as your real estate lawyer I can provide guidance as you navigate the home purchasing process in Jamaica from its inception. I can be reached by way of email at tracey@traceyahamiltonlaw.com or on the telephone at (876)978-5185.