Planning ahead for a new home.

by Graig Rundell on Dec 16, 2012

There are quite a few pluses to buying a new home: you are are able to build equity, there is the pride of ownership, and to obtain accommodation that is often larger and/or more luxurious than what is available in rentals.Real estate has also proven to be a generally safe investment. If you're planning to buy a home within the next few weeks or months, preparing early can help you save time and money. If competing in a seller's market, being prepared may also give you an advantage over other buyers. Consider the following tips prior to starting your home search. Know your bottom line prior to looking at properties. This means more than just knowing what price you can afford. Consider the distance you are going to travel to work, the number of bedrooms and bathrooms you require and what you need in terms of local neighbourhood facilities. If you have children, the proximity to schools and parks will likely be a consideration. By planning your bottom line, you can avoid making quick decisions guided by emotional responses to attractive home features or the pressures of competing buyers. Do a credit check. Poor credit can happen to good people. Sometimes it's due to an unpaid or lost bill and other times it can be an inaccurate report itself. No one wants to discover that they have a bad credit rating after finding the perfect property. Rather than waiting for a lender to inform you of your credit rating, it is smart to obtain a copy prior to starting your property search. This may give you an opportunity to take care of any inaccuracies and perhaps take care of any outstanding debts. The more 'blemishes' you have on your credit report, the more likely it is that your mortgage provider will charge you a higher interest rate as a hedge against a bad loan. Avoid making any major purchases before buying a new property. Mortgage providers tend to become nervous when they see that a new homeowner has stretched their disposable income to the breaking point by buying a car for example. Purchases such as this can make it more difficult to obtain a mortgage or may lower the mortgage amount. Calculate the maximum monthly mortgage payment you can afford. Generally, lenders will allow buyers to take out a mortgage that is approximately equal to 30 percent of their gross monthly income. Depending on your personal circumstances, it may not be wise to take the largest mortgage possible. Consider your other long and short-term expenses such as tuition for yourself or your children, a new car, or vacations. Also be sure to factor in any monthly retirement savings. Think about higher interest rates. Recalculate your maximum monthly mortgage payment based on interest rates that are two to three percent higher than the current mortgage rates. Ask yourself if you could afford to pay a higher monthly payment without infringing on other commitments Determine your cash flow at the time of purchase. There are various fees involved in closing a deal including the down payment, closing costs (federal and property taxes, appraisal fees, title insurance, survey fees, etc.) and home insurance. If moving from a rental property, you should also be prepared for expenses that may have been incorporated into your rent such as heat, hot water, electricity and cable service. Budget for any repairs and maintenance that may be required in your new home. Sometimes people purchase a 'fixer-upper' because the property has other wonderful features such as a beautiful backyard or proximity to schools or parks. If your new home will require repairs or maintenance be sure to budget for these expenses. For example, a bedroom renovation can wait for a few months but most families cannot go a day without a functioning water heater! Get your paperwork in order. Mortgage providers will often need to see bank statements, pay stubs, and tax documents for the past 2 years. Get pre-approved for a loan. Once you have figured out a budget you can live with, approach a mortgage provider to find out if you can get approved for a mortgage and how much you can spend on a property. Purchasing a home is not only a lifestyle change; it is an important investment. Making the most of your investment means planning ahead to find the right property, the best rates and the ideal time for you to enter the market.

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Source: Thinking of Buying or Selling in Mississauga? Come visit me for more information on Mississauga Condos.

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