Answering Your Home Buying Questions;
Buying a home is both thrilling and a bit unnerving, especially if you’re a first-time home buyer. Both experienced home buyers and first-time buyers alike will benefit from the frequently asked questions below. Before you begin your home search, it is recommended that you prepare yourself for the journey by educating yourself. This will ensure you are a knowledgeable home buyer prepared to make a confident home buying decision.
Q – I’ve never purchased a home before. Where should I begin?
A – Actually, you’ve already started the process. Fact-finding and reading articles is a great way to become a smart consumer. The highest priorities to focus on before you begin searching for specific areas, neighborhoods, or homes would be to:
•Familiarize yourself with your personal finances.
•Learn about the real estate market.
•Carefully review your budget and begin to eliminate as much debt as possible.
•Have a down payment and earnest money ready when the time comes to act and make your offer.
Your next step is to contact us. As your home buying specialists, we’ll protect your interest and manage the details of the real estate transaction on your behalf to your complete satisfaction. For more experienced buyers, a little brush up on the real estate process wouldn’t be a bad idea. Of course, you’ll need a really sharp Ottawa real estate team to protect your interests too!
Q – Why should I buy a home instead of renting?
A – One reason is because you will have a sense of personal satisfaction owning your own home. You will be able to create your own private space that is unique to you. When you own, you can do whatever you want, however you want to. It’s all up to you! Another benefit of owning your own home is that you can deduct the cost of your mortgage loan interest from your federal income taxes. In the beginning, interest will compose nearly all of your monthly payment, for over half the number of years you will be paying your mortgage. This can add up to BIG savings at the end of each year. You are also allowed to deduct the property taxes you pay as a homeowner. Another financial plus in owning a home is the possibility of the home increasing in value over time. If you rent, you write your monthly check and it is gone forever. At the end of your lease, you have nothing and face the possibility of increasing rental rates.
Q – How much can I afford to buy my own home?
A – To determine ‘affordability’ you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is a principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes, and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards and lines of credit. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders’ usual guidelines.In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don’t leave yourself house poor. Structure your payments so that you can still afford simple luxuries.
Q – Are home inspections important? What is it and should I have one done?
A – A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection. A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.
Q – With all the bad news about mortgage products and home foreclosures, how do I avoid making a big mistake when deciding which type of loan to select?
A – Once we meet and review your finances along with your home buying needs, you should select a lending consultant. We can recommend several trusted lending professionals or you can choose your own. Having upmost confidence in your lender is important. Be sure you feel completely at ease with them. They should speak to you in easy to understand terms. Ask lots of questions and never sign any document until you know what you are signing and feel completely at ease signing it. More and more lending professionals are recommending fixed interest rate loans and interest rates are still very attractive. Of course, the type of loan best for you depends on several factors. Here are just a few:
•How much money do you have for a down payment?
•How long do you plan to live in the home?
•Do you qualify for a loan?
Because more homes are on the market your choices are plentiful and the time is right for you to buy!
Let’s Get Started!
Are you ready to schedule your home buying consultation? If so, contact us today and together we will review your needs and your budget to help you find the right home for you!