Your home is your biggest investment, and it is typically our largest monthly expense. If you make a mistake when buying one, you could literally pay thousands or tens of thousands more than necessary for the home. Here is the list of the top secrets home buyers wished they knew before buying a home.
Understand What You’re Getting
When you shop for a home, you need to know far more about the property than where it is located and how much they’re asking for it. Every property needs a detailed inspection by an unbiased inspector. This ensures that you know that there are ants in the bathroom wall that need to be treated, leaking piping that requires repairs and a shifting foundation hidden by the new paint job.
Another variation of this theme is knowing exactly where the property boundaries are. You don’t want to buy a property assuming you have certain acreage and find out you’re actually getting far less than expected. In rural areas, the opposite can happen – the deal is for an extra couple of acres, including an oddly shaped section left after a family member partitioned off the piece to build their home and you’re obligated to pay taxes on it and mow it.
Another issue is what is staying with the house or condo and what is going with the current owners. While there are appliances that are rarely moved, take the time to verify what you are and are not getting if you close on the property. You may need to reduce the offer for the home if you have to replace appliances just as you would if they needed to be repaired.
You Can – and Should – Shop around for a Mortgage
It is amazing how many people will shop around for credit cards and roll over balances and spend hours comparing car loans, and then they decide to just walk into the bank and ask about mortgages. They assume that they’ll get the best rate with their current institution because they’re already customers, though this isn’t always the case. Your current lender may not offer the lowest interest rate around, the lowest fees or best loan terms for you. For example, you might be limited on how much you can pay down your mortgage or need to jump through hoops to get the low teaser rate they’re promising. Consult with a Red Deer Mortgage Broker to learn where you can find the best interest rate and favorable loan terms.
Do not make the mistake of being told you’re qualified for a loan means you’re done. Being pre-qualified is not the same thing as being pre-approved. Pre-qualified means the lender thinks they will issue you a loan. Pre-approved means your case has been reviewed and you’ve been approved to borrow up to a set amount. When you’re negotiating for a property, being pre-approved is a major point in your favor because they know you’ll be able to close quickly. Pre-approval also locks in the loan terms you’re committed to for a set period of time, such as saying that if you close on the loan in the next 60 days, you’re guaranteed that set interest rate.
Save Up, and Keep Your Savings Liquid
There are several ways this impacts you during the home shopping process and early period of home ownership. First, if you don’t have a lot of savings and have to rely on a credit card or loan to pay for car repairs or an emergency, it will hurt your credit right as you’re trying to secure a mortgage. Second, if you put your savings in an investment account, the investment may be worth less than the amount you need by the time you have to liquidate it. Third, if you don’t have several thousand in cash set aside and left over even after you close on the home, you’re setting yourself up for trouble. You’ve just bought a home. Now comes the ongoing maintenance costs of cutting the lawn and related expense of buying a lawn mower. When the hot water heater breaks, that’s your responsibility. If you find yourself shopping for new furniture or making little repairs throughout the home, going into debt to pay for these things squeezes your budget. Your mortgage was issued based on your loan to income ratio, while you’re adding to your debt load. This won’t happen if you try to avoid going into debt while settling into your new home.