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In the excitement of beginning a search for
a home, many people jump right in without
considering all of the elements that make
a home truly right for them. It is a complicated
and personal process. An unsuitable choice
can be costly in many ways - you could lose
money, waste time and effort relocating, or
even put your family's health in danger. The
following are some things to consider when
identifying your ideal home and planning a
successful purchase.
Choosing a Neighbourhood
Remember that you can renovate a house but
neighbourhoods take years to change and there's
no guarantee they'll change for the better!
On the other hand, if you really love a certain
part of town but it's out of your price range
you may want to consider buying a less-than-perfect
home then doing renovations. They can be quite
expensive so try to make improvements that
will be reflected in the value when you sell.
These renovations have been found to have
the greatest payback: kitchen 70%, bathroom
68%, interior painting 65%, exterior painting
62%.
Tips on choosing a suitable neighbourhood:
- When you find a locale you like, walk
around it. See what it's like from street
level.
- Are the people friendly?
- Are there stores and recreation facilities
nearby?
- Contact the local school board if you
have children. Do local schools provide
good education opportunities? If applicable
are there private/religious schools?
Figure out what you can afford:
Consider how much you currently need to live
on and how much you actually have leftover
every month. People have a tendency to create
budgets that look nothing like reality - when
we should have $400 left over, for some reason
we only have half that.
Consider these basic costs of buying a new
home:
- Most homes require a down payment of several
thousand dollars.
- Monthly mortgage payments can be 1/3 of
the average person's annual net income.
- You may want to pay for a home inspection.
Consider more than just the structure. Ask
the inspector to check for asbestos, radon,
animal infestation and lead.
- Moving costs can be from a couple hundred
to several thousand dollars depending on
the distance of your move and the quantity
of belongings.
Financing
The sort of home you can afford depends on
several things:
- How much you have saved
- How much you earn
- Past earnings
- Your credit rating
The past has a way of haunting new homebuyers.
If you are concerned about your credit rating
you can usually get a free copy of your rating
report from your local credit bureau. Normally
all that's required is a couple pieces of
photo identification. Remember, a few late
payments or disputed bills can besmirch your
record. Try to pay everything on time and
don't have more than two credit cards. A bad
rating can spell trouble getting a mortgage
or you end up paying more for your mortgage
as a form of insurance to the lender.
Pre-Qualification
This refers to documents from a bank or other
lender indicating that you have the financing
to back up your offer on a house. Pre-qualification
is free and most lenders are happy to sit
down with prospective buyers and figure how
much they can afford. Having an accurate idea
of price range will save time in the bidding
process. If there are several people making
offers on your dream home, being pre-qualified
can make your offer more attractive since
financing is not in question. It is important
to note, however, that lending institutions
will base their final decision about a mortgage
on ability of the buyer to service the debt
as well as the property. Most lenders state
that the two components go hand in hand -
the buyer with the ability to repay a mortgage
and the property as security in the event
of default on payment.
By taking all these points into consideration,
you can worry less about the process of buying
and get busy finding your ideal home!
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