7 Step Home Buyers Guide
Are you a first time buyer, or as a popular HGTV show calls it
, a property virgin. You may be confused and challenged by the real estate purchasing process. I will run this down for you point by point.
Lets outline the advantages of buying first.
1. You control your environment. You, not a landlord, decide what your home will look like, what colours, type of kitchen etc. You can renovate and make this home your own.
2. You are building equity. Owning a home is an investment in your future. Your home may become part of your retirement nestegg. It might be an estate to leave your grandkids. It certainly is an investment with value today as we all need a place to live.
So how do we go about finding and purchasing a home.
1. Determine what you need. Develop a two list process to finding what you want by first knowing what you need and secondly what you would like to have. So sit down with your spouse, partner or significant other, or just yourself if you are single and decide those home features that you must have. This list will include important aspects such as city or country, apartment, condo or house etc. As well if you absolutely need to be near some public transport because you dont have a car, if you absolutely need 3 bedrooms or whatever else is necessary to your life. The second list is things that would be nice but arent essential.
2. Determine your Down Payment. You know how much maney you have saved. It would be unwise to offer up the total amount as a downpayment as there will be other costs involved in your home purchase. There will be closing costs including your lawyer, taxes, utilities hookups, insurance and much more. There could also be repairs that will need to be made in the near future to your new home if it is older. Down payments range from 0% (not so common today) up to 25%. Five to ten percent is safe and acceptable to lenders.
3. Next get a Pre-Approved Mortgage. So to a bank or other lender and supply the information required to be approved for a loan. Once approved you will get a guarantee of a mortgage of a certain amount held open for you for 90-120 days. This gives you time and a budget.
4. Find a real estate agent. You can use the internet or referrals of friends and family to find good realtors working in your area. You should have a realtor working just for you. Many people visit homes with the sellers agent but you should be aware that while they have a duty to you, their first duty is to the vendor. Give your lists to the agent you choose and they will go to work, picking out suitable properties for you to view. You will tour these properties with them until you find one that you want to make an offer on.
5. Making your Offer. Your realtor will do a CMS (Comparative Market Analysis) to determine a fair market price for the property you are interested in, using the sale price of similar properties in the neighbourhood and adding or subtracting value to reflect any differences. You will be required to make a deposit, however you will be able to make your offer conditional on certain events such as, getting financed, selling an existing house, on PEI sometimes getting IRAC approval etc.
6. You will need a Lawyer. Like most fields lawyers specialize. Make sure that you have a lawyer with experience in real estate. As in the case of the realtor you can ask around amongst friends and family or ask your realtor. They know the local lawyers and may make a few suggestions.
7. Final Closing day comes along. This can be a shocking day for some first timers. There are a whole lot of extra costs. These include legal fees, land transfer tax, title insurance, disbursements, adjustments and insurance policies and more. Remember that if you are buying PEI real estate and had to apply to IRAC, there is a fee of $500 or 1%. Extras should be budgeted from 2 to 2 1/2% of the price of the home.
The good news is that this will complete your transaction the home is yours get the
by: R. Parker
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