Buying a Home is one of the largest investments and one of the best decisions that most of us will make. This check-list will help you to plan a succesful purchase.
1/ DETERMINE HOW MUCH YOU CAN AFFORD
Set a realistic budget . Based first upon your income, decide how much you can really afford for your monthly payment.
Most Lenders suggest that the total of your Mortgage Payment, Property Taxes and Utilities should be no more than 32 percent of your Gross income. This is called your GDS, or Gross Debt Service ratio. The total of your Housing Costs plus any other Consumer Debt payments such as Car Loan, Minimum Credit Card Payment etc is called your TDS or Total Debt Service Ratio and should not exceed 38% of Gross Income.
If you wish , I can help you determine this before you meet with your Lender and will confirm exactly what "closing costs" and "mortgage insurance' to plan for, as well as explaining the options for your Deposit such as RRSP Funds.
2/ SEPARATE YOUR NEEDS FROM YOUR “WANTS”
Begin your by making a careful appraisal of your absolute 'must have' needs
Make notes and take the time to be specific . You may want a hot tub, but perhaps you only need a bath tub.
You may want a 4th bedroom, but if it is only for occasional visitors perhaps you only need 3 Bedrooms above grade with an extra one in the Basement.
You may prefer 'move-in condition' but if there are few homes with the location, lot and features that you need ,then you may want to consider a home that requires a bit of work as long as the price reflects it.
3/ GET FREE PROFESSIONAL HELP FROM A BUYER AGENT REALTOR
Buying Real Estate provides a rare opportunity to have a qualified,experienced professional representing your interests at no charge to you.
Don’t make the mistake of dealing directly through ‘Listing Agents”. They will be very friendly and appear helpful, but they will put too much weight on the 'positives' because they are not there to fulfill your needs; they are there to sell THEIR Listings. Some will even claim that you will get a better price by dealing directly with them .
However , Listing Brokerages and their Agents are legally obliged to try for the Highest possible price for the Seller !
Just Look at the flyers that they run to obtain Listings ! " I'll get the Maximum Price ! My average Sale is at over 98% of List Price ! "
Believe me, because I used to be a good one with Re/Max, the LAST thing on a Listing Agent's agenda is leaving any extra money in the Buyer's pocket ! Job 1 is to put the "Max" in the Seller's Pocket .Job 2 is to put the "Max" in his own. Job 3 ? Sounds Like a Conflict of Interest !
A Buyer Agent like myself, is under No Obligation to a Seller. My obligations are to Find The Best Value that meets Your Needs, Get The Lowest Possible Price , negotiate Conditions and Dates that fully Protect Your Interests, ensure you know all Issues, Risks and Concerns regarding the property, manage the Professional Home Inspection process, Co-ordinate with Lawyer, Lender and Seller's Representatives and Anticipate any Potential Problems and counsel you on them.
4/ FINDING THE PROPERTY THAT MEETS YOUR NEEDS
In addition to providing current info on the newest listings that meet your specs, your Buyer Agent can simplify and add convenience to the 'Viewings' process
Make sure that your Buyer Agent is aware of your time schedule and your expectations. Do you like to look at just one or two properties in a session or do you like to see several ? Discuss this with your agent and let him know dates and times that would be convenient for you.
Decide whether you only want to look at specific ones that have sparked your interest from the Listings info, signs or adverts, or if you want your Buyer Agent to include ones that he feels meet the specs. If he has already seen some of the Listings thet interest you he will save your time by drawing attention to amy major negatives that didn't show up in the description
Either way you only need to make one 'phone call or send one e-mail and your Buyer Agent will do all the rest, booking all of the appointments and ,when necessary ,shuffling the individual appointment times to allow for any restrictions while making sure you see everything within the allocated time.
By booking through your Buyer Agent you will be able to see more properties at times that are convenient to you, as he can generally obtain a lock-box key even when the owners are out or the Listing Broker's rep is unavailable. Also, you won't have to waste time introducing yourself and repeating your requirements with a succession of Seller's Agents or listening to their Sales Pitches. Your time can be spent actually looking at the property, spending as long as you like in the good ones, and leaving the un-interesting ones without delay.
Feel free to ask your Buyer Agent for a list of drive-by homes, if you prefer to consider first from the outside. He can than make appointments to show you the interiors of those that appeal.
Feel free to attend "Open Houses"; just be sure to clearly advise the Listing Broker's rep that you are Working Through a Buyer Agent who will contact him if you have any serious interest.
Express your likes and dislikes to your Buyer Agent after you see each home. Communication is essential. Remember that the homes don't belong to your Agent! You must be frank about your likes and dislikes to enable him to do the best job for you.
Keep a record of your research data. Write down comments about the homes that you see. Keep track of your likes and dislikes.
5/ GET PRE-APPROVED NOT JUST “PRE-QUALIFIED”
You will save yourself time and heartache by meeting with your lender early in your search.
Your lender will qualify you for the loan amount that you want and can let you know what specific loan programs would be best for you. By looking at your current income and your credit history, he can help you understand your budget range.
To be sure that you can afford that dream home make sure that you get pre-approved not just “pre-qualified” In the approval process all of your documentation is completed and submitted to an underwriter. The pre-approval that you receive is an actual loan commitment from a lender - your guarantee of loan approval subject only to appraisal of the property. You will then be in the strongest position to negotiate.
The 'Mortgage Calculator' on each page of this site will be helpful in figuring out rough monthly payments ahead of time.
6/ MAKING AN OFFER
Your Buyer Agent can help you make a successful offer . First he will give you an accurate picture of true market value by completing a current market evaluation for comparable properties in the area. Your Buyer Agent will then recommend a target buying price and suggest the best ‘opening offer’ to achieve it, depending on market conditions and the level of competition for the particular property .
He will ensure that all the legalities, dates, amounts and inclusions of the Offer are correct and make sure it contains all the Conditions necessary to protect your interests while still being fair and palatable to the Seller.
Your Buyer Agent will make sure that all Waivers are processed correctly and on time ,will ensure that any necessary Amendments protect your interests and will co-ordinate with all necessary parties through to a satisfactory conclusion.
7/ CONTROLLING THE TIMING OF YOUR INVESTMENT
There are two major investments to consider when buying a property. These are the initial investment (including down payment and closing costs and any vital repairs or upgrades) and the ongoing monthly cost (including principle, interest, taxes, insurance and utilities or Condo Fees if applicable )
Depending on your situation you may prefer a Higher initial investment to ensure a lower ongoing cost or you may be prepared to have a higher ongoing cost in order to have a Lower Initial Investment
If you can afford a Higher Initial Investment, increase your down payment and get a loan with no monthly mortgage insurance premiums. You can reduce them by paying a little more at closing. By putting 20 percent or more down, you can eliminate them entirely.
If you prefer a Lower Initial Investment, choose the down payment loan that is right for you. You do not automatically have to put 20 percent down. You can put 15 percent , 10 percent or 5 percent down and have the mortgage insurance added to your mortgage principal and paid through your monthly payments..
In either case, although a lender will qualify you based on a fixed 5-Year rate, consider a Variable Rate Mortgage. These will generally cost less than fixed rates. If you want you can still pay the same monthly payment as though you were at the fixed rate, but more of each payment will go towards principal and your loan will be paid off faster. Also , if the variable rate goes up a bit your existing payment will still be adequate and you won’t have to re-budget.
If you are buying a property that needs upgrades and you don’t want to put out the cash as a lump sum, talk to your Buyer Agent about having the costs built into the Purchase Price. This can be done either by a mortgage based on ‘Price Plus Improvements’ or more simply by just increasing the Purchase Price, offset by a credit from the Seller on completion that is written into the Offer.
8/ READ News and Advice Section ARTICLES such as "Get the Most for your Money" and "Buyer Agent Selection.... Questions to ask".
For further information on any aspect of Buying Real Estate, and for full details on available homes that fit your needs and budget, simply e-mail paul@buyerscall.com .
