Life is numbers, especially when working through and receiving a mortgage. How much can you afford? What does that translate into payments? What will the interest be? Should you go fixed or variable? Money may make the world go 'round, but it also can cause a lot of stress. Here are some considerations during the home buying process:
Prior to speaking with a lender, you would have already gone to www.PrincetonBC.com to take a look at the types of homes that interest you and will likely meet your particular lifestyle and family needs. You should already have an approximate price range of those homes, having visited a number of real estate websites.
These websites likely also included a mortgage calculator
page that provides the opportunity to fill in information regarding your income, expenses, and possible housing prices; the calculator will then provide you with an approximation of what your monthly mortgage payment will be, based on current rates of interest. You can quickly and easily make adjustments to determine monthly payments that are feasible and the pricing of a home that will fit into that target.
This is usually when you realize the homes you like may not necessarily fit into your budget. Don't despair: there are great homes to be found everywhere. Sometimes they just take a bit longer to find!
Usually mortgages of any type require you to have a certain amount of money that will work as a down payment on the home you are purchasing. The amount depends on your market, your lender, and if there are special considerations (sometimes first-time buyers have a lower down payment). The lender you choose to work with, will have full details as to what your down payment will be, but it is usually a certain percentage of the total cost of the home.
It is beneficial to know how much money you have access to, through a mortgage, prior to setting out and actually 'shopping'. Having done the mortgage calculator
exercise, you likely already have an idea of what you can afford and what amount you will need for a mortgage. This information is powerful when going to speak with a lender, as it will save time and provide the lender with information to begin determining your mortgage needs.
Lenders consider your income, your debts (loans, credit cards, child support, etc.), employment history (having a steady job helps, as does a steady employment record - gaps in income could affect you), credit history, and the value of the desired property. They will look at how much you can comfortably afford to pay for a mortgage, based on your current income and debt load. Typically, this is up to 30% of your gross income, although that varies from lender to lender.
Adjustments to your mortgage calculator
totals will likely occur, as your pre-approval mortgage amount takes everything into consideration, and is also based on the lender's rates, mortgage programs, and payment plans, which sometimes means that you can actually be approved for more than you originally anticipated. You may be closer to that dream home than you thought! As well, once you find a home that you are interested in, the process for acquiring it is now shortened, which means that the potential of losing the home to another buyer is reduced.
A successful purchase starts with the right real estate agent. In fact, an experienced agent will be able to recommend other professionals to join your team, taking more of the stress of searching off of your shoulders.
Lee Mowry has extensive knowledge about not only the homes and home prices within that neighborhood, but also the schools, parks, shopping centres, local businesses, transportation, tax rates, crime rates, age distribution, etc. in that area. He also has experience enabling him to both answer your questions and help you with the process of purchasing a property.
Working with Lee will provide you access to professionals who can use your particular pre-approval mortgage amount to find a home that is suitable not only for your budget, but also your family's needs.
Additional fees will arise as part of the cost of transactions, especially lawyer fees, realtor fees, and broker/bank fees (depending on your lender). Sometimes the seller's lawyer will offer a discount on legal fees if both the buyer and the seller use him or her for the transaction. Other important fees to consider are purchase adjustments, property transfer tax, and HST/GST on new housing and commercial properties.
There are always things in life that arise and can throw you completely off your game. In obtaining a mortgage and purchasing your home, here are some topics that you may experience and that you will want to think through early in the process, to ensure you have them covered mentally, physically, and financially:
- Land Taxes & Fees - When a property changes hands, there are a number of searches that must be done to ensure that that the person selling the land (and property on it) is authorized to do so, where the property boundaries are, if there are liens (or outstanding loans or debts) on it, etc. These searches all cost money, so there is often a land title search fee that the buyer must pay to have them completed. Sometimes this cost is covered by the lawyer, and then included in the overall legal fees. As well, there is also a land transfer tax the buyer must pay to have the ownership (or title) of the land transferred to them from the seller. Again, this is sometimes covered in the legal fees, so check with your lawyer. The costs of both the fees and the taxes will vary depending on your location, so ask your lawyer for an accurate cost assessment.
- Inspections - Home inspections are sometimes completed by the seller prior to putting the house on the market, but often inspections are done at the request and expense of the buyer. Check with the seller to see if this is something that is already completed; otherwise, it is your decision whether you want to complete a home inspection or not. They can be valuable in determining if there are any significant issues with the home, including structural weakness; foundational damage; evidence of flooding or fire; roof leaks or sagging; heating, cooling, or plumbing issues; furnace and water heater weakness; etc. Paying for a home inspection can sometimes yield information regarding potential problems that may surface in the near future and cost thousands to fix. Buyers may choose to opt out of getting a home inspection, though, as they often cost hundreds of dollars up-front and can take several days or weeks to complete, depending on scheduling.
- Moving Costs - There are many ways to move: hiring a moving company, renting a moving truck, or getting your buddy to help. Whichever method you choose, there will be costs associated that will differ depending on the extent of the assistance. For instance, some companies will come into your home and pack for you, whereas others just move your possessions to and from the houses and truck. If you are moving everything yourself, keep in mind that you will need to obtain a large quantity of moving boxes and supplies for your possessions, and may need to also rent moving blankets to prevent scratches or damage to larger pieces of furniture.
- Home Insurance - To protect your new investment, you'll want to consider purchasing home insurance, which can cover fire, water, environmental, break-in, and other damages. You should also consider insurance for the valuables and possessions within the home, in the event of vandalism or theft. Insurance providers offer a variety of policies and packages that can provide specific coverage or combined protection. Local home insurance companies include: Valley First Insurance & Westland Insurance.
- Appliances - Usually the original listing information will indicate if the seller is including any of the appliances, such as fridge, stove, washer, dryer, dishwasher, microwave, hot tub, barbeque, etc. If this information is not indicated, be sure and ask, whether or not you actually want the appliances in the home. If you are wanting to keep the appliances, sometimes sellers don't think that anyone would want "this old thing?" and don't think to offer it in the sale. Keep in mind that including the appliances in the sale may mean an increase in the price, so clarify if this will be the case. You might also want to ask how old the appliances are, if any difficulties have been encountered with them, if there is any warranty remaining on them, the last time they were serviced, and if they have any special 'quirks' to operate efficiently.
- Utilities - In moving into a new home, you will need to communicate with the utility companies (power, water, telephone, cable/satellite, internet) to have your old address disconnected and your new one connected. There are often fees associated with starting up new accounts or transferring old ones, so ensure you ask what those fees are. In speaking with the sellers, ascertain what their monthly costs were for the home during their tenure there, as that will give you an approximation of what to expect on a monthly basis for your budget. Keep in mind that preferences on home temperature, appliance usage, and lifestyle will affect the costs of utilities. See the Resources page of this website for contact information on utilities, etc.
- Changing Your Address - When moving, this is usually one of the key areas forgotten! You will want to change your address with any companies who send you information, magazines, and bills. You will also want to change your address for your insurance policies, banking, driver's license, auto insurance, schools, family, friends, employment information, income tax information providers, etc. Also provide your new address to the buyers of your previous home, so that they can forward any mail that is erroneously sent to your previous address. This can easily be done by sending postcards to everyone.
- Renovations - It is not uncommon for a 'new' home to need renovations prior to you moving in, which can be as simple as repainting to as complex as knocking down walls. When shopping for a new home, consider what you will want to change about it prior to moving in, and then research the costs that will be associated with doing these renos. Depending on the expense and type of work, you may want to get it done prior to moving into the home. It is not uncommon to think "We'll do those renos later", only to discover that several years have gone by and they still aren't done! In other cases, there may be things you want to change, but they are not pressing and can be done in stages. Determine what will be the best for you, but do think about setting aside a bit of money now for any renovations that you may want to do, no matter how small.
Owning your own home is an enriching and rewarding experience, but the process in finding one and acquiring it can sometimes be a little daunting and time-consuming. Armed with more knowledge, though, you can begin to simplify this process, plan for what will work the best for you, and begin your journey to owning your dream home!