17 Secrets to buying a home
The biggest investment in your life is buying a home.
This investment is also an emotional process. I want you to be empowered by making a rational decision, by controlling your emotions and not falling prey to them.
I have bought three homes and sold two. We recently bought and sold homes and moved between two different cities. I am going to break this series into three different parts:
- What to look for when buying a home
- How to sell your home
- How to prepare to move
Know Your Buying Power
The first thing I want you to do is to be realistic about what you can afford and then look for a home within that price range.
You are setting yourself for failure by just looking at homes. You might fall in love with a detached home, with Brazilian hardwood, stainless steel appliances, a white cabinet, a glass shower, a Roman bath, and a big backyard. However, no use imagining yourself in it, if it is $300,000 over your budget.
Make sure you have anywhere between 5% to 20% of the purchasing price for a down payment. You will also need funds for the closing costs which include land transfer tax, lawyers fees, mortgage default insurance, title insurance, home inspection, and moving costs.
So know your price range. You can know your price range by getting a mortgage pre-approval from a banker or mortgage broker.
Have Your Documents in Order
The banker, lawyer, and your real estate agent will at some point ask you for the following documents:
Proof of identification like driver’s license, passport, or credit card
Proof of employment and income like pay stubs, and income tax returns
Proof of down payment like bank statements, sale of another property, gift letter from parents or friends
Information about your debts and financial information
Get a Mortgage Pre-Approval When Buying a Home
A pre-approval letter is a document from a bank or lender that tells you how much they are willing to offer you as a mortgage. Real estate agents and sellers love that you have this, as it communicates that you are serious about buying their property. The bank has looked at your finances and determined how much they will lend you. The pre-approval letter states the maximum amount of mortgage you could qualify for, the payments, and the interest rates. If you qualify for a $900,000 mortgage and have $100,000 saved, then your price range is 1 million dollars.
A Lawyer is needed
The most expensive purchase of your life will be purchasing a home. Therefore you will need legal advice from a lawyer who specializes in real estate law.
I personally chose Gerald Brunt as he has been doing real estate for a long time and lived and practiced in the same city that I was selling. Mr. Brunt for the purchase reviewed the agreement of purchase and all other legal documents, made sure there were no claims listed, registered, or on file against the property, arranged for title insurance, and looked at having a valid title upon closing, and made sure the property taxes are up to date, calculated the land transfer tax due on closing and paid it, set up the mortgage documents, closed the transaction and made sure all financial and legal obligations are met.
For selling the property Mr. Brunt reviewed the agreement of sale, looked at all the terms and conditions, paid off the old mortgage, and made sure all legal and financial conditions are met.
Corinne at the office was outstanding. We closed on the busiest day for real estate transactions and we were in our new home by 11 am.
When buying a home the Right Real Estate Agent makes a difference
This is an important decision. I chose Darwin Jurado because he is a full-time agent. I am an emotional guy, so I wanted someone who is calm. Darwin also is an active listener, honest, passionate, supportive, excellent negotiator, experienced, and has an online presence. We bought our home on the second trip to the city and beat 29 bidders because Darwin was on top of everything. To me having a professional guide me through the process was a real benefit.
I had a few meetings with Darwin and explained exactly what we were looking for. A home under five years old, a modern kitchen, hardwood, a glass washroom, and a Roman bath were a must. Our present home was on a corner lot and I did not want it again or a big lot and any gardening work.
Location, Location, Location
In real estate, location is everything. In Toronto, the first townhome I purchased was within walking distance of the best school. The detached home in Whitby was a 3-minute walk to Jack Miner, the best public school in the Durham region. The present home is a five-minute walk to a mall, grocery store, restaurants, dentist, schools, and doctor.
It is critical not to focus only on the home but on the entire surrounding area. There are many factors like a train going behind, next to transmission wires, flood areas, and garbage processing depot that will have a negative impact on the value of your home.
Look into what kind of development plans are planned for the neighborhood. I bought a brand new place that was under two years old. There is no more construction and no more dust, trucks, noise, or digging.
Find out if the street you are moving to is a major street or a shortcut. If there are lots of undeveloped lands around, what will be built there?
Look at whether a condo, townhouse, semi, or detached meets your requirements
It is important to know what size home you want depending on your needs and the square footage and the number of washrooms and bedrooms you will need.
If you are thinking of a condo, think about the high maintenance costs and living in small quarters.
What is your ideal yard?
The detached home that I just sold was a corner lot and was a 50-foot by 110-foot yard. The previous couple were avid gardeners. It was a lot of work and maintenance.
A big lot with only sod has a few advantages. You can build a pool, pond, patio, hot tubs, built-in grills, and swing sets for your kids.
A corner lot is lots of work and remember in the winter the garbage flies so you can end up with lots of garbage.
Remember to think about how much it will cost to maintain your lot when buying a home.
How many bedrooms
If you decide that a three-bedroom home will meet the needs of your family, make sure all the three rooms are on the same floor if you have small kids. If you want to use one bedroom as a home office, it is practical that is away from the kitchen and living room.
The main living room should have a walk-in closet and an attached washroom. The natural light coming from the windows and privacy is equally important.
Keep an eye on the floors, ceilings, and walls for any sign of mildew, smoke, pet, or water damage.
Washrooms are equally important
If you are purchasing the home, test the faucets, turn the shower on, flush the toilets, click the fan on, and keep an eye for leaks. Write down the make of the shower and tub. I prefer a glass door shower over curtains. Also is the bathtub plastic or porcelain? You do not want to buy a home that has plumbing or water pressure issues.
A separate living room or open concept with a kitchen
A living room is a place where you live, eat, entertain and watch TV. You need to know what you want from the living room and do you want a warm vibe or modern and chic. The paint and decor can always be changed. However, you need to see yourself relaxing and having a great time in this safe place. Also, look at your furniture, the electrical outlets, and how you want the TV placed.
Most people want an open concept kitchen with stainless steel appliances, high-quality cabinetry, granite or quartz countertops, an island in the middle, and hardwood floors.
Do you want to rent the basement or use it for your own entertainment
As you enter the basement, it is important to note whether it is unfinished or unfinished. Do you get any smell or see any water stains? Also, have the home inspector do a radon test.
One advantage of a finished basement is that it can be rented out.
Look out for what is in the attic
Have a quick look at the attack for animal droppings, leaks, and damage to the roof, or insulation. If the attic is thinly insulated this will impact the temperature in the home.
The details are in a Garage
A condo usually comes with one parking spot. A townhouse could come with one or two parking spots. A semi comes with one parking spot in the garage and one on the driveway. A detached can come with one to four garages and depending on the length of the driveway. It is important to know how many parking spots are available and also if you can park on the street.
I personally prefer a detached garage where I am not living above it. So you want to keep an eye on whether the garage is attached or behind or on the side, can you store anything in it, and is it in good condition?
The air conditioning and heating systems can make you or break you
As a homeowner, besides the taxes, heating and cooling will be a major expense. You want to know if the furnace uses gas or electricity. Also, is it on rental or fully paid off?
Some homes have a central air conditioning system and some have individual air conditioners. Be aware of the systems in the home and how old they are.
Judge a house by its exterior
A home inspection will show any issues with the brick, siding, windows, or roof.
Find out when the shingles were put on the roof.
Look out for any cracks in the foundation. A hairline crack means the home is settling. Anything bigger than that should be looked at.
In the case of siding look out for cracks or rotting wood.
No home will be perfect unless it is custom built to your specification. Once you are thinking of putting an offer, depending on the market and age of the home it is always good to get a home inspection.
Get a home inspector
You have read every article on what to look for when buying a home. However, you do not have the experience, or know-how to see everything. That is where the home inspector comes in. Your real estate agent will find you a professional home inspector who will look at your home from a different perspective with no emotions attached. The home inspector can point out the potential issues, or repairs that are needed.
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