Buying A Home With Confidence
Congratulations! You have decided to purchase a home, or are thinking about buying one. You will be joining the ranks of hundreds of families who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family. When you own your own home, your hard-earned dollars contribute to your mortgage. The equity you earn is yours. Over time, your home will increase in value.
Whether you are a first time home buyer or an experienced home buyer it can be an intimidating and stressful time. Your first home may not be your dream home, but it is a starting point for you and your family to grow and learn about the housing market. Now that you have decided to purchase a home, please read below where you will find some helpful tips to ease you into the buying process, information on viewing homes, the offer, closing details and moving. Please feel free at any time to contact The Carl Wilson Team for clarification on these tips or with any questions you may have.
Thinking About Purchasing A Home?
The length of time that it will take to cover those costs depends on various economic factors. Average appreciation tends to sit at around 5% per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. The real estate market can be particularly volatile, however, and dramatic swings up and down are not uncommon.
How long the home will meet your needs.
What features do you require in a home to satisfy your lifestyle now? Five years from now? People tend to remain in homes longer than they initially intend, primarily due to the work and expense associated with moving. Therefore it is worth considering a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.
Your financial health – your credit and home affordability.
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, people with poor credit tend to pay far more to borrow.
Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. It is, however, important to stay within your comfort zone. Purchasing a house involves many up-front and ongoing costs, and the stress of worrying about those costs often outweighs the satisfaction that may come from owning a slightly nicer home.
To determine how much home you can afford, talk to a lender or go online and use a home affordability calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36″ rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation.
The “28/36″ rule means that your monthly housing costs can’t exceed 28 percent of your gross income and your total debt load can’t exceed 36 percent of your total gross monthly income. Depending on your assets, credit history, job potential, and other factors, lenders can push the ratios up to 40-60% or higher. While we are not advocating you purchase a home utilizing the higher ratios, it is important for you to know your options.
Where the money for the transaction will come from.
Typically, home buyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk for a lender. If your credit isn’t stellar but you have managed to save 5% for a down payment, you will still appear to be a very good financial risk to a lender.
The ongoing costs of home ownership.
Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment. If you buy a condominium or townhouse, a monthly homeowner’s association or maintenance fee will be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your Realtor® and your lender aware of your desire to limit these costs.
If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.
Avoid Common Buyer Errors
Shopping for a new home is an emotional experience. It is, however, also a business transaction, and must be treated as such. Three of the most devastating things that can go wrong are:
• Paying too much
• Losing a dream home to another buyer
• Buying the wrong home
When you have a systematic plan before you shop, you’ll be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:
- Get pre-approved: It only takes a few hours to get financing pre-approval. When you are shopping
for a home, this gives you more power. A seller is more likely to consider an offer from a qualified buyer.
I can arrange this pre-approval on your behalf.
- Get the information you need: What price do you offer a seller? Is the seller’s asking price too high?
Is it a deal? Your own research is important, as is the assistance of a Realtor®. Carl Wilson is a professional Realtor® and can offer an unbiased opinion on the value of a home, based on many factors and a great deal
of information. Without knowledge of the market, your offer could be too much. Or worse, you could miss out
on a great buying opportunity. My professional real estate service will ensure you of a smooth and happy real estate transaction.
- Buy YOUR home: What do you need and want in a home? Sounds simple, but clearly identifying your needs
and bringing an objective view to home shopping leaves you in a much better position. How much space do
you really need? Too small and you may feel like you live in constant clutter. Too big and maintenance may become too daunting. Outline all of your priorities, and work on finding not just a great home, but a great
home for you.
- Update the survey: Before the purchase is completed, an updated survey is important. This report will
indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbour’s
new fence which is extending a boundary line, etc.), and will guarantee that you are indeed getting what
you pay for.
- Minimize the unexpected: For $300 – $500, a professional inspector will conduct a thorough inspection
of the home. Their expertise can mean the difference between uncovering major flaws before or after you
own a home. Make the final contract subject to the report findings. Carl can provide the names of home inspectors from his Preferred Partners list.
- Remember additional costs: Besides the funds for the purchase of a home, you will need funds for items such as land transfer tax, insurance, legal fees, surveys, inspections, etc.
- Take a deep breath: Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing, or even the sale if you attempt to push things through too hastily. I will assist you through all aspects of your real estate transaction.
How to get THE home at THE price
Whether you are buying your first home or your fifth, the process of buying a home can be an emotional, time-consuming venture. Feeling that, in the end, you made the right decision and got a good deal can make all the difference.
As with most major decisions, the amount of work and research you undertake before you start shopping can have a dramatic effect on how well you do in the end.