The Real Estate Partners 'Buying A Home Blue Print'. Our guide to helping buyers ensure their purchase goes smooth, before and after you take possession!
It's very important for buyers to know tips, tricks, and to obtain proper consultation before they make the biggest purchase in their life. Unexpected financial moves, or life changes, can result in hurting, or potentially stopping you from making that home purchase!
1. Don't Apply for new Credit Cards!
Maybe you're walking through the mall, airport, or you're making a deposit at the bank, and a sales representative starts selling you on the latest, greatest, credit card on the market, WITH 20,000 bonus points and one year of annual fees waived, PLUS a guaranteed approval of $XYZ! Sounds fantastic right? Before you sign on the dotted line and get that new card, consult with your mortgage partner and REALTOR® who can provide advice, guidance and information on how this could affect your deal. Applying for new credit during the application or purchase process could have negative complications in your home search or purchase!
2. Four Quick Tips for buyers.
From buying a new car, to credit card debts, we quickly dive into four quick tips that will keep your path to buying a home on point.
- Look, but don't buy! You've just purchased your dream home, ready to furnish it with a new couch, TV, and other beautiful pieces, we advise you hold off until you're moved in. Big purchases like this, especially if they're on credit / store credit, or deplete savings, can have adverse effects on your mortgage application. Think of this (and the other scenarios we list throughout) when the bank approves you for a mortgage, they look at your entire financial picture, taking factors like money for down payment, assets, monthly bills, debts, income, etc all into account for how much they are willing to provide clients a mortgage for. If you're approved to take on a $500,000 mortgage but change your financial position considerably, your lender may not be able to provide a mortgage for what you were initially approved for.
- Plan on buying a new vehicle to park in front of your new home? Unless you plan on living in it, hold off! Another major purchase that home buyers can unfortunately take on, that can really impact your home purchase!
- Don't get behind on payments! Late or missed payments on bills can hurt your credit, if you're planning on purchasing a home in the future, keep on top of your bills and debts.
- Credit cards should have lower balances. Credit cards fall under 'unsecured debt' this plays a huge role in how much a lender is willing to provide a mortgage for, discuss with your mortgage partner on the exact implications of how much a credit card debt could impact your application. It's also important to remember that you shouldn't max out credit cards, it's worse to have three $500 credit cards maxed out, compared to one card having a balance of $1,500 that has a limit of $5,000 as you're only utilizing 30% of the cards limit vs 100% on the three $500 limit cards.
3. Postpone Job Hunting
You've been pre-approved, you're out shopping for a new home, things are looking great, but you want to buy a home in Auburn Bay, however, that's not really close to where you currently work. So you start applying to places closer to the community you plan on moving to, and sure enough you're offered a new job, that pays better, and is only 5 minutes from Auburn Bay ! Sounds like a win -win for you and your family? Before you take that new job, we advise you discuss the implications of doing so with your mortgage partner, all cases are looked at individually, but generally speaking, lenders look for stability in employment and a job change prior to purchase could be an unwise decision. Typically it's safe to take on a new role with your current company, but we always advise a quick conversation with your mortgage partner to ensure any changes in your application won't have any effect on buying your new home.
4. Save Up.
When buying a home, there are a list of unexpected costs that some buyers simply didn't know they exist, and when purchase / closing time circles around, they're left in a predicament. You don't just need a down payment to buy a home and make your dream of home ownership a reality, here's a list of fees, expenses, new potential bills/costs that come with home ownership. Please note, not all these costs apply to every individual, they will vary on a case by case basis, and you should consult with your REP REALTOR® to further examine what costs may arise for you specifically.
Home inspection fees - These fees can range in price, typically they're around $400-$600 but vary based on the inspector, their services, and what offerings they provide. Keep in mind, if you write an offer on a home, complete an inspection, and find something that cannot be negotiated, fixed, or addressed within the deal (which does happen) you could find yourself walking away from a purchase and paying for another inspection on a different property you put an offer on.
Home Insurance - You've bought a new home, and now you want to keep that investment secure, you'll need to find an insurance provider to write an insurance policy covering your property, costs for home insurance can be as little as $500 a year to $2,500+ depending on how much coverage you need/require, and your previous insurance history.
Appraisal - Some lenders will not cover this cost for buyers, if the home requires an appraisal you could be looking at a $200 - $500 charge.
Lawyer / Legal Fees - Very important for ensuring your interests are protected, a lawyer will review the RPR, documents, hold / clear funds and look after your legal needs during the purchase process. These fees usually range from $1,000 - $2,000
CHMC Fees - If you're not putting down 20% on your homes purchase, you will be paying CMHC fees to insure your mortgage, consult with your mortgage representative to discuss costs as they vary based on the purchase price.
HOA Fees - Did you know some communities in Calgary require you to pay a home owners association fee? If you're moving to a community like Mahogany, you will pay an HOA fee (which varies by property). Often though these HOA fees provide access to community specific features like lake access, community recreational access, etc.
Moving and Relocation Expenses - From professional movers, to renting a moving truck yourself, we definitely recommend obtaining quotes and budgeting for the big move before you make it.
Condominium Fees - If you're buying a property that is part of a condominium corporation, make sure you budget for the new added monthly expense of condo fees, these can range very dramatically based on the size of the property, the amenities / services included, and more. Typically these range from $150 - $500 but ask your REALTOR® with the Real Estate Professionals to find out exactly what the condo fees are for prospective homes you're looking to buy.
Utilities & Property Taxes - Now that you're a home owner, you'll also be taking on a few other expenses that you may not have had prior to, utilities from water/sewage to electricity, along with property taxes should be budgeted.
Quick closing costs cheat sheet
With a purchase price of $250,000 - $300,000 you can roughly expect fees of -
|$400 - $600|
|CMHC Mortgage Insurance||+ $2,000|
|Appraisal and Mortgage||$150 - $400|
|Legal / Lawyer Fees||$1000 - $2000|
|GST (For New Homes)||Varies on Property|
|Home Insurance||$500 - $2,000+|
|Moving / Storage Fees||$750 - $1500+|
|HOA Fees||$150 - $300+|