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Preparing
To Buy:
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,
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.
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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 us or not, we 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 Estimators
which will give you an idea of what your monthly payments
will be.
Don't forget - we may also be able to help you with a Mortgage
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... |
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