Here are some items to keep in mind when you are preparing to buy your home.
- Keep your credit clean: Run a credit check on yourself and verify that the information is correct. Contact any creditors who haven’t updated your record in terms of cancelled cards or balances that have been paid off. Paying off high interest credit cards as soon as possible will help make it easier for mortgage approval.
- Be a Pre-Approved Buyer: Talk to your mortgage professional about how much home you can afford and get pre-approved before you start looking. Becoming pre-approved is very easy. Contact your mortgage professional to arrange a mortgage consultation and they will work with you to complete your mortgage application with a credit check prior to beginning your search for a home. Pre-approval means that you have actually been approved for the purchase by a lender, which gives you the edge in home purchase negotiating. The pre-approval guarantees you, up to a period of 120 days, that if the rate increases during that time, you will still get the original rate. If the property you are looking to buy won’t be completed for six months or more, then you should look into the mortgages offered by the builders on-site. In these cases, the on-site lender will typically be able to guarantee a capped rate for a longer time duration (such as 12 to 18 months), usually until the expected project completion date. You should negotiate a capped rate for as long a period as possible. These typically have some built-in extension protection if the project takes longer than expected.
- Determine your priorities: Take some time to think about what factors are most important to you. Make a list of what you want, need, and don’t want in a home. Rate your desired home attributes on a scale of 1 to 10 (10 being an absolute “must have” and 1 being a “nice to have, but not a necessity”). This checklist will allow you to objectively assess different homes according to your needs and will save you invaluable time when you go out to see various building developments.
- Check out the neighbourhood: Make yourself a “home value expert.” Investigate the areas and price ranges for the type of home you are looking for. If you find yourself becoming interested in a particular neighbourhood, familiarize yourself with the local amenities, schools, property taxes, crime rates, and other neighhourhood features. Talk with different people in the area and visit at different times during the day. The characteristics of the area may change dramatically during different hours of the day. Go to the local planning office to find out about the plans for the area. Research is half the battle. Remember, you’re getting more than just a home – you’re buying the entire neighbourhood package!
- Get legal advice before signing the contract: Talk with a real estate lawyer and review the Agreement of Purchase and Sale (APS) with them prior to signing the contract. This will ensure you understand the exact terms and conditions of the contract, and that you know what’s included in the purchase price. Be sure that any verbal agreements from the seller are included in written form within the APS. Be sure that you’ve negotiated a reasonable closing or occupancy date and make sure that all deposit details are documented.
- Stay calm: Even in a hot market, be cool and calculated with your decisions. Your home purchase may be your single largest investment. If you’re buying a new condominium, be sure to review the disclosure statement carefully. By law, you have a 10-day cooling off period once you receive the disclosure statement.
- Be thorough during the Pre-Delivery Inspection: Before you take possession of your new home or condominium, the builder is required to do a pre delivery inspection of the property with you. This is one of your first opportunities to see your new home in its final state. During this inspection, it is crucial to note anything that is missing, not working properly, or damaged. Conduct the inspection at your own pace, and make sure to check out all the details. Write everything down yourself on the pre-delivery inspection form. This is one of the most important opportunities for you to note any problems in the new property.
- Make sure that your finances are in order: As you begin the search for a new home, this is an ideal time to make sure that your finances are in order and to set up your financial plan for the future. A professional mortgage consultant who is truly looking after your financial interests will be able to advise you on various strategies to help you develop a financial plan and build more wealth. Remember to have fun during your home buying adventure. You’ll only buy your first home once and with the right professional guidance, it can be a stress-free and enjoyable experience!These tips were from Jeff Hui, a mortgage consultant. This was recently published through the Toronto Star