A new year has begun and If you have been writing your goals for 2015 and the plan is to find a new home or property, may I suggest that there are a number of things one can do in advance of that purchase to make your transition a smooth one. Not only that, but being prepared and ready to make a “clean” offer , particularly as it relates to financing, will put you ahead of other prospective buyers who are looking at the same properties you are, but who do not have their affairs in order and are not armed and ready to go.
Astute home buyers will begin their preparation well in advance of visiting prospective properties by undertaking the following steps.
1. If you are already a home-owner, make sure you are up to date on your current mortgage status. Are you able to “port” it to a new property particularly if your interest rate is attractively low? Are there significant pay-out penalties if you are planning on paying it out and refinancing?
2. Pull your own credit report from either Equifax or TransUnion. This can be easily be done now on-line. By doing this yourself before approaching prospective lenders, you will have the opportunity to see any discrepancies that you will need to have fixed or realize there are things you will need to do to improve a less than strong credit rating by paying off certain creditors before making a new mortgage application. Remember that there is a downside to having too many lenders pull a credit report as these do show up on one’s report itself. Better to find out before you approach prospective lenders.
3. Crunch the numbers to find out your comfort level for what you can truely afford to pay for a new home or property. Canada Mortgage and Housing Corp. (CMHC) offers tools to help you calculate your net worth, household budget, monthly debt payments etc., as do most lending institutions on-line.
3. Get a written pre-approval for a new mortgage for the amount you contemplate you will require. This is not the same as being pre-qualified in that for pre qualifying you will need to be able to supply the necessary documentation to prove your net worth, income, employment, liabilities and the amount of your down payment. Most lenders will hold their commitment to you at a certain interest rate for a period of 90 days. Using a qualified and reputable mortgage broker can be invaluable in this process. Furthermore a mortgage broker can source the best rates and options for your situation from various lenders.
5. Make a list of your needs and wants in a new home and categorize by “must have’s” and “wish-list”. Have this ready to discuss with your real estate agent. There may be trade off’s in this regard and try to not overreach for real estate that looks like it would be a wonderful purchase but is in fact ‘too much home’ for the long term.
6. Choose a reputable real estate agent. While today’s buyers have far more information on properties for sale than ever before from on line sources, an informed realtor will still bring expertise and experience to represent your best interests and help manoeuvre through any potential pit-falls or challenges in the buying process. In Alberta where the buyer does not pay for this service from their own pocket, why not take advantage of a professional acting in your best interests? A realtor will be able to advise on current market conditions, be aware of recent comparable sales and sometimes know of properties that have not yet reached the MLS system that may be just what you’re looking for.
7. If you have to sell your own home in order to close on your new purchase, be aware that if you make an offer “subject to” the sale of your existing property, you will need to be ready to go to market within a very short time-frame of the offer being accepted (anywhere from 2 – 10 days in most cases). This will mean that you will have to increase your list of “things to do” considerably before you are ready to go looking for your next home. I covered a number of those items in last month’s article but if you would like a complete list entitled ” Preparing to Sell – Be Prepared for Questions”, please contact me.
© 2016 by Wayne Chaulk