It may seem obvious, with today’s low interest rates, high rents and a strong housing market: if you’ve got the money, buy now. But how do you know you are ready to make the leap? Not everyone who would like to buy is actually prepared, financially and emotionally. Real estate experts have recognized signs that indicate when someone is, and meeting those criteria can make the difference between frustration and success. Here are some signs that will tell you if you’re ready to take the home-buying plunge:
You’re taking financial steps: the first sign is the financial foundation upon which a potential buyer can build. It’s a great sign if potential homebuyers have already started saving for a down payment. Some homeowners have either been saving up for their first home over a certain length of time and have given themselves a target for the amount that will be their down payment. Or you will need to have a meeting with a financial advisor or bank, who will show you the amount that you can realistically spend. You should also meet with a mortgage broker so you can gain pre-approval. Pre-approval doesn’t mean that you will actually get your credit looked at by a broker, but asking questions about your income, expenses and getting to know your ratios better will help you. A buyer may not get the final approval if their credit rating isn’t strong. In today’s real estate market you want to make sure that you’re ready. You want to be able to act fast when your dream home comes along!
Mapping out your spending: the ability to budget is important. A well-educated first-time buyer needs to know what their overall home buying goals are. The move itself as well as the fees and taxes and the costs of properly maintaining a house can add considerable amounts to the down payment and mortgage. Apartment dwellers might not think about these expenses. Whether it’s a new patio set or a new roof, first-time homebuyers need to figure out how much their housing expenses are going to be. Does the new house you purchased need renovations? A general rule, renovation projects will take three times longer than you assumed they would. They also cost at least twice as much as you budgeted.
You know what you want: is it a condo, a townhouse, or a big, fully detached home? You should decide that before you start browsing the listings. Until you have looked at your budget, and talked to your mortgage broker, you can’t really even determine what type of property you should be looking at, and does it fit with your lifestyle? Knowing the neighbourhood where you want to be is another important part of the process. It may be trendy or offer great views, but does it mean a longer commute to work, or does it have all the services you need—amenities, schools, and easy access to transportation? You need to know what community you want to be in, otherwise your location choice may come back and bite you in the butt. If you end up leaving the house after a few years, you’re going to loose money on it. Because after your moving costs, legal costs etc. its sale is not going to compensate you through the market’s growth.
You know what you need: another sign that you are ready to buy your first home is when you decide that you are ready to make a serious commitment. This means that you have committed to focus on what you need in a home versus on focusing on what you want. Three bedrooms, two bathrooms and an attached garage are needs. A want would be high-end fixtures, granite countertops or a pool. Would-be first time homebuyers are sometimes seduced by the ‘bling’ they see in a home and sometimes results in the budget being thrown out the window. Ignoring properties that meet your needs but not your whims will only make the already complicated process of buying a new home more challenging.
You have tempered your expectations: there’s no such thing as a perfect house. The home you end up buying and making your own becomes the one you love. You need to be prepared, as a first-time homebuyer, to temper your expectations. You are not going to get what you want and if your young, you’re not going to get the style and the quality of living your parents have. There’s a risk that if people don’t act on properties that they can make work, prices continue to go up. A decision based on emotion, rather than practicalities, can cost tens of thousands of dollars. However, losing a home that would have been the right buy is also apart of the education of buying a home. As a first-time homebuyer, you need to live the experience of a home getting away from you to realize that sometimes the real estate market won’t wait for you. Buying your first house is one of the most difficult decisions you will ever make. But understanding the signs of the well-prepared homebuyer will go a long way in ensuring that it’s the right home for you.
Source: Globe & Mail
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By Production CENTURY 21 Canada 2013
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