Things Buyers Should Know When Purchasing a New Home
There are some things you need to know before you become involved in buying a home. As they say, knowledge is indeed power and we are about to give you some very good tips on the basics of finding and buying a home.
How Long do you Plan on Living in your Home?
You should have a pretty good idea of just how long you intend to live in a home before you buy it. The longer the better, as it will serve to save you some money in the long run. Mortgage terms typically run for five years. Planning on staying during that term and longer is a very good financial move on your part. If you move frequently you will be subject to commissions and fees for each transaction. If you have a job that requires you to relocate frequently, buying a home may not be the best decision for you. Staying long periods in a home allows it to build up equity.
Know Your Credit Score Rating
Before the housing crisis hit in 2008, it was much easier to secure a mortgage. New guidelines now in place make it tougher and as you might suspect, lenders are being much more selective about who they extend credit to. Having a high credit score makes it much easier to secure that mortgage for a new home. Both the banks and lenders will feel much more comfortable in dealing with you if your history is stellar and shows that you honour commitments.
Budget Wisely and Don't be Overshadowed by Dreams
Everyone loves to dream of a spacious home surrounded by acres of lovely foliage, but the reality of what you can afford will change that. You must stick with a home that is within your budget. If you buy a home that is really beyond your means you may have to sacrifice some of the things that make living fun. If you have already been through the pre-approval process, you should have a pretty good idea of what you can afford. One of the best ways to gauge what you can afford is to not allot more than 35% of your take home pay to a mortgage. That will allow you to live within your budget and allow you to still live in comfort.
Allocate as much Funds as Possible for a Down Payment
The more money you can allocate for a down payment, the better. Lenders will offer you a better rate and terms with a large down payment. If you can afford to put down 20%, you will not be forced to buy mortgage insurance with the CMHC. That alone will save you a significant amount of money since it normally costs about 2.5% of the selling price of the home. Zero down payments options may also be available to you, but with terms not nearly as favorable.
Consider the Children
If you have children, this is a big consideration. But if you don't, it is still a good idea to explore the area schools. Having good area schools makes it a good selling point to a wider audience of buyers, so you will need to get feedback on their track records on education. If it is good, it can actually increase your property value.
Choose a Top REALTOR®
The age of the internet has changed the real estate world in a large way. It is now easy for buyers to go online and research, buy, or sell a home without ever seeking the advice of an agent. Face to face buying provides you with powerful inside knowledge and a better overall feeling of security. A REALTOR® also is there to make sure all of the legal papers are dealt with and that the transaction is above the board and not a scam.
You always want to avoid the disappointment of finding a property you really want, only to find out that it is beyond what you can reasonably afford. This why a mortgage pre-approval is so important, since you can be presented only with homes that are within your price range. The pre-approval process includes talking to a professional who is experienced in mortgages and will take a long, hard look at your financial situation. This process is very accurate and helpful given that you are up front and completely honest about your financial situation. Pre-approval also signals sellers that you are a serious buyer and your offers on their properties should be taken seriously.
The More You Know, the Better it is For You
A professional agent brings much to the table in helping you search for a dream home. By putting their wealth of knowledge and years of experience to work for you, they can analyze the current real estate market in a neighborhood of your choice in order to help you find the best possible deal. Your REALTOR® looks at much more than just the asking price, they analyze the price similar homes in the area have actually sold for. This helps you to make a reasonable bid that is not too high and a bid that is not too low.
Pay Attention to Property Inspection
It is of the utmost importance to get a property inspection BEFORE you make an offer. In a tight real estate market today, these are becoming more and more common. Included in this inspection is a house inspection and with this inspection you can avoid making a bid on a property that has several thousands of dollars of problems that are not readily apparent. If you decide to make an offer, you may want to have repairs listed as a condition of sale or ask for a reduction in the asking price.