Your home will likely be your most expensive purchase. That is why you should have all the facts before you make the decision to buy a new home. This report explains the most important tips to consider when purchasing a home.
Do a Thorough Inspection
Don’t expect that the seller to confess all the problems with the home. You need to be inquisitive and investigate for yourself to be sure that the home really is a good buy and that you are getting a good deal. Be sure to conduct a proper home inspection early on, so that any problems that are detected can be solved prior to closing. You may consider hiring an inspector to examine the home. Make sure you make the contract conditional upon receiving an inspection report from your inspector that is satisfactory to you.
For a list of our recommended home inspectors, click here
Note: In a competitive market, the offer with the least amount of conditions will be the most attractive to the Seller. In this case, you may need to have a home inspection completed before submitting your offer, and therefore determining any potential problems ahead of time, or go ahead without an inspection condition. Both ways have their risks, but could make the difference between getting a home or not in a multiple offer situation.
A pre-approved mortgage can be easily obtained and saves you time and energy when placing an offer. With a pre-approved mortgage application, you can shop with freedom, confidence and security because you know you have a commitment from a lender to purchase the home you choose.
However, we should note that a pre-approval will have conditions with it that you must fulfil, such as paying off all consumer debt prior to closing, filing your current taxes, etc.
Also, a pre-approval is based on your ability to meet your financial obligations and does not reflect the value of the home. If the lender determines the home to be worth less than the amount being offered, they may decide to refuse to finance the purchase, or require you to make up the difference between your offer price and the appraised value to suit your downpayment requirement. This is why we like to ensure the lender gives a final approval on your loan before removing/fulfilling your condition.
Request a Property Survey
As part of your purchase offer, you should try to attain a property survey. This will help you determine where your property begins and ends and will help you determine how to use it. More times than not, the property survey has gone missing though and Title Insurance becomes a factor (very common today).
Think About the Hidden Costs
Make a list of all the fees you may incur in closing the home so that you know exactly what you will be paying. Having unexpected expenses when moving is something you’ll want to avoid.
Costs to consider:
- Home Inspection Costs – can range anywhere from $300 – $1500, depending on the scope of the inspection.
- Land Transfer Tax (LTT): in Ontario, there is a tax you pay when a land transfer tax when you purchase your home. If you are buying within the city of Toronto, you will pay nearly twice as much as the rest of Ontario, depending on the price point. [note, there is an instant rebate for first time home buyers] (for more on visit: http://www.fin.gov.on.ca/en/tax/ltt/)
- Mortgage Default insurance premium: All high ratio mortgages (with a downpayment of 20% or less) will have a mortgage insurance premium, which will be built into the mortgage. more info: https://www.youtube.com/watch?v=GncRSX7BUvM
- Appraisal Fees: in most cases these are paid by the lenders, but in cases of private lenders (i.e. a non-traditional bank/lender), you will likely be required to pay for appraisal fees.
- Rental Contracts on Chattels/fixtures in the house
- Moving Expenses: Will you need a mover? Will you be renting a truck?
Buy What You Need
Determine what your are looking for in a home. Often times, buyers get swept up in the emotion and excitement of the buying process and purchase the wrong home. Take the time upfront to clearly define your wants and needs. Put it in writing and measure every home you look at with it. Important things to think about: How important is the size of the house, compared to the amount of time it takes to commute to and from work? Do yo have time to maintain a large property, or would a small yard/patio be sufficient for your lifestyle requirements.
Do you Research
Be sure to research the market and the neighbourhood so that you have a good understanding of what you should be paying for your new home. This way you can determine how to much to offer on a home and if your getting a good deal. If you fail to research the market, making your offer would be like bidding blind. Without knowledge of the market, you could easily make a bad bid.
When working with Buyers, we complete a full market analysis of the home and how it stacks up to the local area sales to ensure we are helping our clients obtain a property at a good value.
Don’t make the Seller out to be your enemy
Some home buyers can get wrapped up in a mental war with the seller if negotiations go back and forth a few times, especially if it is over small items. Keep your cool as the Seller is just trying to get the best deal possible for them, like you are on the other side. Working your self up into a mental battle with the other side will only frustrate you leave a bad taste in your mouth, as well as the Sellers. Don’t let your agent do this either! Agents can kill a deal if they try to be too bossy, which is not in your best interest.
Visit before Closing
Have a clause added to your contract that allows you a couple of visits to the home before your closing. Visiting after any conditions have been removed can be very beneficial for several reasons. 1. You will be able to plan for any renovations you want to have done prior to moving in; 2. You will be able to ensure the property is being maintained properly. Some home owners will begin neglecting the home once they know it is sold. By visiting before closing, you can identify this and put a stop to it.