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How
Much You Can Afford
This is the first
rule of home
buying, and that depends on how much income and how much debt you have.
Keep in mind that most lending institutions will require at least 5%
deposit.
Don't forget about inspection cost, closing costs and other extras.
These
expenses can easily add 2% to 3% onto the basic purchase price. To find
out more about mortgage visit our site Mortgage
Info.
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Type
Of Home You Wish To Own
Before you buy a
home, careful
preparation and planning are the key to success. The house you buy
should
satisfy all of your needs and as many wants as possible. Make a list of
the important features and amenities you want your new home to have and
rank these features in "must have," and ones you will comprise on. Your
choices will be also influenced by your budget and your lifestyle.
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Determine
Location
A neighborhood and
area that
caters to your needs is an important factor when choosing a home.
Consider
the identity of the neighborhood and remember the overall impression
given
by an area is key to its value. When you are in situation to determine
the desired location for your new home, the best way is to start by
examining
your priorities and making some important comparisons: Are the
neighborhoods
you are considering safe? Is the surrounding neighborhood or the home
itself
your most important consideration? Do any of the areas seem to attract
more families with children, or adult residents? Where do you fit in?
What
about schools, work, shopping, public transportation, etc.
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First
Time Home Buyers
The Home Buyer's
Plan (HBP)
lets first-time buyers, including anyone who hasn't owned a home in the
last 5 years, borrow up to $20,000 per spouse from their RSP
interest-free
to buy a home, to be repaid over the next 15 years. Only funds
that
have been in your RSP at least 90 days can be withdrawn. Minimum annual
payments of 1/15th of the original withdrawn amount are required each
year
- failure to do so will result in that 1/15th being added to your
taxable
income any year the minimum re-deposit is not made.
When you withdraw
funds
from your RRSPs under the HBP, you have to intend to occupy the
qualifying
home as your principal place of residence no later than one year after
buying or building it. Once you occupy the home, there is no minimum
period
of time that you have to live there.
To find more about
HBP click
here
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Buy
First Or Sell First
Every day, thousands
of homeowners
are faced with the stressful dilemma of whether to buy first or sell
first.
How you approach the "buy first or sell first" issue depends on your
unique
situation. If you buy before selling, you could run the risk of owning
two homes or just as bad, if you sell first, you could end up without
home.
If you choose to buy first, make sure the offer to purchase is
conditional
on selling your current house. That way, if you sell your house, both
deals
proceed; if not, the deal is off, and you won't be stuck with two
homes.
If you choose to
sell first,
you will know how much money you will get and that will help you to
establish
a price range for the new home and to negotiate the purchase more
vigorously.
You could also feel great pressure to find something fast and even
settle
for a less-than-ideal home or you may require interim housing, which
could
be very stressful if you have to stay with family or friends for an
extended
period. Should you decide to rent, it may be difficult to find suitable
housing, especially if you have pets. In either case, furniture would
have
to be moved twice and possibly stored long term. Market conditions are
another important consideration in deciding which route to follow. In a
seller's market, you'll probably do better selling after you've bought,
but in a buyer's market, it makes more sense to sell first, and then
buy.
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New
Versus Previously Owned
New Homes: If
you want
new design features, customized interior colors, low maintenance, new
appliances
and design features, you'll buy a new house. Before you purchase a
brand
new home investigate builders reputation and quality of its work. Don't
be afraid to bang on doors and ask other buyers what they think of
their
builder. Don't forget GST (7%).
Resale Homes:
If
you're looking for mature surrounding, established communities,
character,
finished landscaping and improvements for your next home, you'll buy an
existing house. For buyers on a tight budget, a previously owned home
in
move in condition is always an appealing choice. Keep in mind that most
of the resale homes are exempt from GST.
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Choose
A Real Estate Attorney
When looking for an
attorney,
make sure it's real estate lawyer/notary, the one who understand real
estate
and spends most of the time closing real estate deals.
Ask friends for
recommendations
or ask your real estate agent to recommend several. Call to inquire
about
fees and to check on their experience. In general, more experienced
attorneys
will cost more.
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Property
Inspection
The house inspection
should
be a part of the home-buying process. To find a good inspector,
ask
friends and colleagues who have sold homes in the area.You should tag
along
during the home inspection, besides a qualified opinion on the
home's
condition you will also learn a lot about how to care for and maintain
your home in the future. A typical inspection should take two to three
hours. The inspector will give you a written report as to the condition
of the property. Fees
should range from $ 250 to $450, depending on the size and price of the
home. The home inspector should be bonded, licensed, and insured.
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Negotiating
You are in a better
position
to negotiate when you are an educated buyer. It is good idea to take
advantage
of home buyer's seminars and real estate web pages. The more you know
about
a seller's motivation, the stronger a negotiating position you are in.
For example, seller who must move quickly due to a job transfer may be
amenable to a lower price with a speedy escrow. Common points of
negotiation
include: possession date, fixtures that seller will leave behind and
other
things that a seller may need to fix or replace for the buyer. Leave
nothing
to chance, if in doubt, spell it out in the offer, because if you
don't,
it can prove very costly. Remember, no matter how much you want the
house,
it is in your best interest to remain calm during negotiations.
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Offer
Before making an
offer, check
the recent sales prices of comparable homes in the neighborhood to see
how the seller's asking price stacks up. Remember, that the listing
price
is what the seller would like to receive but is not necessarily what
they
will settle for. Avoid low-ball offers because that could insult the
seller,
sour the sale, and discourage the seller from negotiating even in a
buyer's
market. Most offers are "Conditional" and they usually include two
standard
contingencies: a financing contingency, which makes the sale dependent
on the buyers' ability to obtain a loan commitment from a lender, and
an
inspection contingency, which allows buyers to have property inspected
to their satisfaction. When that is the case, a conditional offer is
subject
to these conditions. As a buyer, make sure you understand how to keep
your
offer alive or kill the deal.
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From
Contract To Closing
Make sure your insurance will
take effect
on closing. Arrange for your move as early as possible. Satisfy all
other
outstanding conditions from contract prior to closing and make sure
that,
prior to closing, all required documents are prepared, necessary
arrangements
are made for the closing and all issues dealt with. It is a good idea
to
meet your attorney a day or two
before
closing to review and sign all closing documents.
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Insurance
Info
Mortgage Default
Insurance
- Insurance that is required when your down payment is less than 25% of
the purchase price. This type of insurance protects lenders, by
guaranteeing
them the payment if you default, but you're still responsible for the
debt.
Borrowers must pay the insurer 1.25% of the mortgage amount as the
insurance
premium when the loan-to-value ratio is between 75% and 80%; 2% between
80% and 85%; and 2.5% between 85% and 90%, and 3.75% between 90 and 95.
Minimum premium is $500. Your lender will arrange for the mortgage
default
insurance on your behalf.
Mortgage Fire
Insurance
- All lenders require that a Fire Insurance Policy be in place at the
time
they fund a mortgage. Insure only the building, not the land, as the
land
on which home sits won't burn. Keep in mind that insurance coverage
should
be determined by the value of the building, not the size of your
mortgage.
Have a replacement cost endorsement in your insurance policy.
Mortgage Life
Insurance
- This type of insurance ensures that in the event of the death of
either
of the borrowers the mortgage will be paid off in full. The cost of
Mortgage
Life Insurance is based on the amount of your mortgage and your age
when
you apply.
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©2002
Associate Realty Brantford Inc. - Brokerage. All rights reserved.
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