Whether you’ve scrimped, sacrificed and saved or whether money fell from the sky – you’ve got your down payment.
It was easy, and now you’re out house shopping. It’s exciting, it’s daunting, it’s fun and stressful – all at the same time. Here are a few pointers from those who have gone before you.
Don’t over-extend yourself
You’re so lucky. Not often in the course of history have mortgage interest rates been this low. This might widen the playing field when it comes to looking at your monthly payments. It could mean the difference between a 900 square foot starter home and a home large enough to hold your family (if there’s one in your future). You mortgage lender may tell you that on paper, you qualify for a certain level of debt. But imagine if mortgage rates suddenly double. Can you handle a jump like that? Give yourself lots of extra space in your budget to handle a fluctuation of a few percentage points.
The negotiation process
Here’s where patience comes into play, and trust in your agent. Unless you’re buying a brand new home, you’ll be purchasing a home from an owner who is emotionally, mentally and financially invested in the property. If you’re prepared to negotiate and be patient during the back and forth, you might get a great deal. Or you might lose your dream home. Be patient and trust in the process. There may be counter-offers and counters to the counter-offer. Tears may be shed. There is also a lot of waiting. When you first present your offer, the offer is only “open” for a certain period of time, specified in your offer. Waiting for a response can be grueling.
You may be expecting some extra charges as part of the closing cost, but you might be dishing out some dough for other things you weren’t counting on, such as:
- A home inspection: You found an older home but you’re not sure about the foundation. It’s always a good idea to get a home inspection but make sure you’re serious about the home you want. As the purchaser, it’s your expense and it can cost anywhere between $500 and $1,000 depending on the size of your home and how much time the inspector is on site. The good news is that if major issues are uncovered during the home inspection, you can negotiate a lower price on the home. Unless the issues are so trivial then you’re just nit-picking.
- Replacing the locks: Once you take possession, you’ll want a locksmith to come out. That will cost you a few dollars.
- Appliances and window coverings: Your realtor may advise you to include these in your offer to purchase but the seller is not obliged to give you these items. Be prepared to purchase these items if necessary.
- A deposit with your offer. For some, this is a given but some people have been caught short not knowing that a deposit is required with your deposit. Should your offer be accepted, your cheque will be held in trust until you take possession. It will also be applied to your down payment. Just be prepared for this, especially if you don’t normally write cheques.
Have a backup house
Fall in love twice. If you put all your hopes in one property you could be setting yourself up for a big disappointment. This will also prevent you from perhaps accepting a counter offer from the seller than you’re not crazy about. You could end up paying more because you have your heart set on just one house.
Keep a business relationship with your Realtor
It’s easy to fall into conversation with your agent as you’re looking for a house. However, when it’s time to make an offer you want it to be all business and if you’ve become buddy-buddy with your Realtor it may be difficult to be honest if things go sideways. Keep it all business. It’s nice to be nice but you need to protect your interests in case your Realtor falls short.