10 Tips From A First Time Home Buyer, is a guest post written by Jeff from Million Endeavour.
Purchasing your first home can be an extremely nerve-wrecking experience. At least for me it was. I had constantly found myself in the position of questioning whether my investment was good or bad. One wrong move could set my financial plan back for years. Imagine the pressure!
Although I had just closed my first property not too long ago, selecting the right property for me was one of the most difficult things that I had done in my life.
10 Tips From A First Time Home Buyer
Here are some of the things that I have learned from buying my first home:
1. Make Sure You’re Approved For A Mortgage
Before beginning your search for the perfect property, it would probably be a good idea to consult a bank or mortgage broker to determine your qualification for a mortgage. If a mortgage cannot be secured, moving forward would be a waste of time for both you and your realtor.
2. Finding A Good Realtor
Good representation in your property search could be the deciding factor in how well the entire process goes. There are a wide range of personalities out there and picking the right realtor is very important. The sad truth is that there are many real estate agents who are unmotivated, lazy and simply does not care about their job. Bad representation could possibly lead to paying more for a property than what it could have sold for.
3. Don’t Sign Anything Without Reading
Your realtor, mortgage provider and lawyer will be throwing tons of paper your way. It is always best to know what you are getting yourself into by reading everything that requires your signature. Trust me when I say that there will be some hidden fine prints buried deep in big paragraphs that may contradict your best interest or affect your decision-making.
4. Set Your Budget And Stick To It
There may be times when what seems to be the perfect property comes along but is out of your budget. When situations like these arises, you will have to consider whether you can afford to put in more money or to move on to the next listing. This predicament can be prevented by setting a budget right from the start and sticking to it no matter what. This may include rejecting an offer on a property that you really like.
5. Do Your Own Research
Realtors may be more knowledgeable in the housing market, but the things they say should always be taken with a grain of salt. Although they may assure their clients that they look out for their best interest, at the end of they day, they still make commission off your purchase. A pushy agent may even convince you to buy the next property you consider just to collect their pay cheque and move on to their next project.
6. Be Prepared For Disappointment And Rejections
Just when you think you’ve found your dream property, the offer that has been put in may be rejected by the seller. In most of these cases, the seller may find that your bid was too low and would demand something higher. Be emotionally prepared to put in offers on multiple properties before getting accepted just in case you don’t get your first choice.
7. Understand Your Mortgage Commitments
There are two types of mortgages; variable and fixed rates. Aside from shopping around for the lowest rate, do take into account how long your term is before you would have to renew your mortgage. You may have to pay a hefty penalty should you decide to sell your newly acquired property before the end of your mortgage term. If your plan is to sell the property in the near future, the better option would be to opt for a shorter term. Keep in mind that shorter mortgage terms generally come at a higher rate.
8. Know The Taxes
The taxes that comes with buying a home should always be calculated and added on top of the home’s purchase price. The type of taxes and rates will vary from city to city. A news article not too long ago reported that a student was faced with 84K of unexpected foreign buyer tax in her attempt to purchase a home. Backing out of the deal would mean that she would have to forfeit her $56,000 deposit. Situations like these can get very complicated and messy.
9. Getting A Lawyer
Selecting an excellent lawyer is also crucial in finalizing a property deal. Most lawyers will arrange for a meeting to walk you through everything before they put the property under your name. Your lawyer should also outline to you both the positive and negative aspects of your property before you make the final decision to go ahead with the purchase. Remember, the lawyer that offers the cheapest fee may not necessarily be the best person for the job. It is recommended that you ask for referrals from someone who can vouch for their work ethics and expertise.
10. Take Into Account The Closing Cost
In addition to the down payment of the property, the closing cost is something that should be considered in your overall budget. This cost is comprised of the lawyer fee, land transfer taxes, title insurance, home appraisal and inspection. The total for all of this could add up to around $5,000, depending on where your property is located.
Do you have any tips for a first time home buyer?