When purchasing a
new property there are a few considerations we believe are important and
relevant to the buying process. I hope you find these Home
Buying Tips useful.
CALCULATE
WHAT YOU CAN AFFORD
Knowing
what you can afford before you embark on hunting for a new home can save
you a lot of time and put you in a strong bargaining position to buy the
best property for the least money. Getting pre-approved for a loan puts
you firmly in the driver’s seat. Amongst other things such as interest
rates and your credit history, lenders consider your income and long-term
debts when calculating a “safe” mortgage payment. Typically,
a ratio of 28/33 is used in this calculation. Using this ratio a mortgage
payment of 28% of your gross monthly income is allowed as long as this
payment and any other long-term debts do not exceed 33% of your gross
income. Remember - long-term debts include property taxes, insurance and
any Homeowner Association fees on the new property so don’t forget
them in your calculations and don’t forget to calculate your closing
costs.
SELL
YOUR PROPERTY FIRST
Making
an offer on a new property that is contingent on you selling your own
home first weakens your bargaining position. The seller is unlikely to
want to wait when he or she may get another offer from another buyer.
Even if the seller agrees to your terms it is likely to be at the full
asking price, meaning that you may have to pay more for the property than
you would otherwise. Alternatively, the seller may set a time limit in
which you have to sell your house which means you may have to accept a
lower offer than you would have to otherwise.
CHOOSE
A NEIGHBORHOOD
Narrowing
your search to one or just a few neighborhoods will save you a lot of
time in the long run. Evaluate your choices with regard to such factors
as property values, schools, traffic, crime rate, proximity of shops and
other amenities, etc. Your Realtor® should be able to help find the
information on which to base your evaluation. To maximize your property
purchase check such factors as whether multiple offers are being made
on the property and what is the average number of days on the market for
similar properties in the neighborhood. If you can, make a “wish
list” of the things you would like included in your new home and
use this as a guide to evaluating each prospective property. Remember,
however, to consider each property on its own merits such as layout, location,
size, etc. and not on how it is currently decorated or furnished or any
other factor that can be changed to meet your tastes.
TAKE
YOUR TIME!
For most
of us, buying a home is the biggest purchase we will ever make in our
lives! Consequently it is important to make the best and most informed
choice when making your buying decision. Don’t rush it! Beware of
advertisements that are designed to generate phone calls and may not give
a true or full representation of a property. A good Realtor® will
help provide you with the genuine information you might need to make your
decision. Form a working relationship with a real estate agent and the
agent will strive to assist you through their knowledge and experience.
He or she is legally obliged to work hard for you and protect your best
interests. Whether you elect to work with me or not, I urge you to select
a Realtor® to work with and receive all the rights, benefits and privileges
that this relationship will accord you.
PREPARING
THE OFFER
Working
with a Real Estate agent is the best way to prepare your offer contract.
In deciding on an offer price you can rely on your agent to research the
market and provide you with professional advice. Work out how much you
can afford to pay and how much you are prepared to pay before you present
your offer. Too low an offer just wastes time. The idea is to offer an
amount the the seller is likely to accept or, at least, to counter with
a slightly higher amount.
CONTRACTS
It is
important to ensure that the Purchase Contract contains all the necessary
terms and conditions that reflect your requirements. Again your Real Estate
Agent can help you. The contract should include the date of occupancy
as mutually agreed with the seller. Include any repairs that you require
the seller to perform as a condition of your purchase and also include
any features or fixtures that are to be left by seller when he/she/they
vacate the property. Sometimes the seller will agree to special financing
arrangements in addition to or as an alternative to a conventional mortgage.
This should be spelled out in the contract. All other contingencies, such
as home, pool, water inspections etc. should also be documented.
CLOSING
COSTS
The "Closing
Date" for your property purchase is the day that you actually buy
your new home. It is important that you understand and can properly budget
for the additional fees you will be asked to pay at closing, in addition
to your down payment, prepaid property taxes and any homeowner's insurance
premiums. These "Closing Costs" can include, but are not restricted
to:
- Credit Check Fees
(This is a fee for a credit check on mortgage applicants and is not
refundable, even if you are not accepted for a mortgage loan)
- Property Appraisal
(This is also nonrefundable)
- Title Insurance
Fee
- Survey Charge
- Loan Origination
Fee
- Attorney or Escrow
Fees
- Document Preparation
Fee
- Garbage or Trash
Collection Fees
- Points (These are
the upfront interest fees paid in exchange for a lower interest rate.
Each point is represents 1% of the loan amount. It may be possible to
have the seller contract to pay the points).
MORTGAGES
Unlike rent payments,
a portion of your mortgage payment builds equity or ownership in your
home. This equity can also help you secure other loans such as auto loans,
a second home or a business loan. Additionally, mortgage interest payments
are tax deductible.
Click here to use
our Mortgage
Calculator which will give you an idea of what your monthly
payments will be.
MOVING
TIPS
With all the paper
work complete you are ready to move in! Check out these Moving
Tips to smooth the way to your new home and...
