1. CREDIT SCORES
How Your Credit Score Affects How Much House You'll Be Able To Buy...
Your credit score is now the most important factor in determining how much house you can buy, so if you are in the market for a new home, you need to understand how it affects you.
In order to make it easy for mortgage companies to determine the risk of lending to you, they are using a system called credit scoring (also called "FICO" scores).
When lenders look at your credit report, they can instantly see how much debt you have, how reliable you are with bill payments, and if you've had any bankruptcies within the last several years.
With your credit report, lenders get a "credit score" which takes all of this information and boils it down to a number between 300 and 900. The higher the number, the less of a credit risk you are seen to be, and this is how lenders decide which types of loans you will be eligible for.
As with all new things, there is controversy over credit scores.
To be elligible for some types of loans, you require a minimum credit score without any exceptions. And credit scores fluctuate over time. In fact, the mere act of applying for credit can lower your credit score.
How to make sure you have the highest credit score possible
To maximize your credit score, you should avoid applying for any new credit cards or consumer loans.
Don't go to the discount store and take them up on the "No interest, no payments for one year" offer -- and avoid financing a car!
After you buy your home and get your mortgage you can do all of these things, but before then it's a bad idea. Buying things on credit hurts your credit score, and leaves less money for your downpayment.
Lenders also look at this figure to decide how much money they will lend you, and how much interest they will charge you on the loan.
That's why it's best to wait until after you've bought your home to go shopping for furniture and appliances. There is also another reason to wait.
Once you've bought your home, you can get a loan for up to 100% of your home's value to buy anything you want.
If you learn to play by the rules of the lenders' game, you can get the best credit score possible, which improves the odds that you can get the home of your dreams.
2. SAVE ON INTEREST
How to Save Thousands of Dollars in Interest and Pay Your Mortgage off Faster
There are a few easy ways to make extra principle payments that can save you a ton of money in interest expenses and get you mortgage-free sooner than you thought possible. Here are a few simple strategies you can use:
Round your monthly payment up
The results of this simple strategy can save you a fortune and drastically reduce the length of your mortgage.
As an example, if your monthly mortgage payments were $734 dollars a month, but you rounded it up to $800 per month, you would save more than $48,000 in interest payments, and reduce the length of your mortgage by 7.5 years!
Make One Time Pre-Payments Using Your Income Tax Refund
This is an easy way to save money and shorten your mortgage. For example, if you have a $100,000 mortgage, and you have a $1000 tax refund this year, you take apply that refund to your mortgage. Over time, this will save you more than $8600 and shave 1 year and 1 month off your mortgage! That's another amazing result from a simple strategy.
Choose a 15 Year Mortgage
If you can afford it, you are far better off getting a 15 year mortgage instead of 30. It won't cost you much more, and the interest savings are truly incredible.
If you have a mortgage of $100,000 at 8% interest over 15 years, your monthly payment would be about $200 more, but you'd end up saving $92,083 in interest over the life of your mortgage!
Using these strategies is the easiest way to reduce your interest expenses and shorten your mortgage period.
3. AVOIDING MONEY PITS
How to Avoid a Money Pit: Be on the Lookout for these 6 Warning Signs That Could Mean Expensive Repairs...
Many people think that serious defects in a home are easy to spot, but the truth is, often the most serious and costly problems can only be detected upon very close inspection. When you are considering buying a home, look for the following six telltale signs of serious problems...
Leaks are the most common problem with roofs, and are tough to detect from outside. However, from inside an attic, you can often see water marks where there is a leak.
Make sure you are confident that both water systems: the one that brings fresh water in and the one that takes sewage out are functioning well before signing on the dotted line.
Before you agree to buy you should make sure that you can run all of the appliances you want to and even power tools at the same time without having a power failure. You also want to make sure that the electrical system is safe and does not present a fire hazard.
Heating and Cooling Systems
Be sure to thoroughly inspect the heating and air conditioning systems in any home you are considering purchasing.
Bad Paint and Signs of Rotting
The paint inside and outside the house can reveal a lot about the condition of the underlying material. Check several places on several walls, using your eyes and a screwdriver for poking.
Cracks and Other Important Signs
Cracks in walls, doors not closing properly and uneven floors can all be signs that there is a problem with the foundation. If the foundation is not strong, the entire house could literally collapse, so you should carefully check for these signs. A bad foundation may not mean imminent disaster, but it could be used to bargain for a lower sale price, or you could ask to have the owner repair it before the sale.
4. COSTLY MISTAKES TO AVOID
Not Knowing What You Can Afford
Choosing the Wrong Mortgage
A bad mortgage can cost you thousands in taxes and interest. Consult an accountant before you choose your mortgage. What is the general condition of the home? Are there signs that the owners have kept up with repairs and maintenance? Will the home need any major repairs, remodeling, or renovations? Is there anything such as the furnace that may need to be replaced soon?
Not Finding Problems with the Home Before You Buy
Make sure you avoid a money pit! You should always have a profession inspector look at the home before buying it, otherwise you could be looking at huge repair costs later on. This is why home inspections are important.
Not Understanding How Your Credit Can Impact Your Ability to Purchase or Refinance a Home
Take a walk around the neighbourhood. Are the homes well-kept, indicating pride of ownership? Do you like where the home is situated in the neighbourhood? Does the neighbourhood have what you want, like access to public transit, shopping, local parks?
5. SELECTING THE RIGHT AGENT
Do You Have A Personal Real Estate Agent?If you’re planning on buying a home, you may have already done some shopping around on your own. Perhaps you’ve checked out a few open houses or called the number on a For Sale sign to schedule a private viewing of that property.
Yes, you can do all of that on your own, if you have the time and expertise. However, statistics prove that you’ll be more successful in finding your dream home at the right price with your own personal real estate agent.
Your Real Estate Agent Works For YouA real estate agent, especially one who knows the local market well (like I do), can help you find and buy your ideal home, quickly, and make the entire process go smoothly for you. During a viewing, your real estate agent will give you the inside scoop on that property, so you know the full story. Your real estate agent will also point out desirable features, and potential “issues”, that you might otherwise miss.
When it comes time to make an offer, your real estate agent will present and negotiate it on your behalf. If you don’t have your own real estate agent, you would have to deal directly with the seller’s agent, who is legally obliged to work in the seller’s best interests – not yours.
Bottom line: Your own personal real estate agent is there for you, every step of the way. At least, that’s how I work with my clients.
What to Look For in a Real Estate AgentWhen buying a home, you want a real estate agent who…
- Takes the time to understand your needs and goals, so you have a true partner in your home buying journey.
- Explains everything clearly and answers your questions, so you’re never in the dark.
- Has expertise and a track record of success in the local market.
- Knows how to find great properties in your price range.
- Will alert you to new listings, quickly, so you get the jump on those opportunities.
- Will advise you on the best price to offer for the home you want.
- Will prepare and present the offer, and skillfully negotiate such things as price, conditions, closing dates, etc. so you get the best deal.
- Will save you potentially thousands of dollars by ensuring you don’t overpay for the property you want.
- Will recommend reputable home inspectors, movers and other professionals you may need.
Not every real estate agent offers all of these services. My clients say that I do. They also tell me how much they appreciate my professionalism, expertise and accessibility.
The best way to select the right real estate agent, is to meet with him or her in person. Ask questions. See if they're a good fit.
6. ARRANGE FINANCING
Get a mortgage preapproval! An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range. That’s why I recommend getting a Mortgage Pre-Approval. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval: It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing. It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You can arrange for a mortgage preapproval with your bank or other lender, or by working with a good mortgage broker. I’m well-connected in the local real estate scene, so if you want me to recommend a reputable broker or lender, please contact me.
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home. It may seem like a scary process, but it is actually straightforward. You can usually get a Mortgage Pre-Approval in a day. You’ll be glad that you did.
By knowing what you can afford, you can confidently shop within that price range. For example, if you qualify for a $450,000 mortgage, and you have another $100,000 available as a down payment, you can look for homes in the $550,000 range.
7. VIEWING HOMES
As your real estate agent, my most important job is to make the home shopping process pleasant and rewarding for you.
I do that in a number of ways.
I regularly recommend properties for viewing that closely match your needs and wants, and are within your price range. That spares you the frustration of visiting homes that aren’t suitable. I make sure you don’t miss opportunities. When a desirable property suddenly comes on the market, you’re alerted. I help you schedule viewings that fit your schedule, so there’s little if any inconvenience for you.
Before you view a property, I provide you with in-depth details on the home, so you can make an informed decision. This includes closing dates, market value, and more. Later, if you have questions, I get the answers for you.
I also give you the scoop on the neighbourhood, so you get a clear sense of what an area is like in terms of lifestyle, safety, schools, etc.
When you find a property you like, I give you my honest, professional recommendation as to how well the home meets your needs and wants. You won’t have to make such an important decision without my expert advice.
As your real estate agent, I’m committed to getting you into the right home, and I’m with you every step of the way.
Here are a few questions and ideas to consider when viewing homes to help make the process easier and more productive:
- Does the home have your “needs” features (those features you must have)? (For example, number of bedrooms, closet space, kitchen size, etc.)
- Does the home have any of your “wants” features (those features you’d like to have but would be willing to forgo)? (For example, large backyard deck, spacious family room, etc.)
- What is the general condition of the home? (Are there signs that the owners have kept up with repairs and maintenance?) Will the home need any major repairs, remodeling or renovations? Is there anything, such as the furnace, that may need to be replaced soon?
- What do you like most about the home? Is there anything about the home you don’t like? Can that be changed with a remodeling or renovation now or in the future?
- Take a walk around the neighbourhood. Are the homes well-kept, indicating pride of ownership? Do you like where the home is situated in the neighbourhood? Does the neighbourhood have what you want? (For example, access to public transit, shopping, local parks, etc.)
- Viewing properties should never be a frustrating ordeal. It’s my job to help make the process easy and productive for you, so you can find the home you want.
8. MAKING AN OFFER
When you view a home on the market that you really want, you can hardly wait to be handed the keys. In fact, you may worry that the property will somehow slip through your fingers. Don’t be. You’ve got an expert by your side. Me. My job, as your real estate agent, is to ensure you get that home – and at a price that works for you.
Preparing the Offer
The first step is preparing the Offer. This is the document I present to the seller that basically states the price you’re offering, as well as any conditions.
The price we go in with is critical. You want it to reflect the true market value of the property so the seller will take your offer seriously. On the other hand, you don’t want to go in too high and risk overpaying for the home.
Don’t worry. I know how to prepare a winning offer and get you the property at the lowest possible price. In fact, I look after your interests throughout the entire process.
How the Process WorksWhen you decide to make an offer on a home, here’s what typically happens:
I’ll recommend a price that has the best chance of being accepted by the seller, without over-paying for the home.
Obviously, sellers prefer offers that have no conditions. However, I may suggest a condition, such as passing a professional home inspection, be included for your protection. We’ll talk about that.
I’ll prepare the necessary documents and present your offer to the seller and his or her real estate agent personally.
If the offer isn’t accepted, or if the seller makes a counter-offer, I’ll work with the seller’s agent, skillfully negotiating on your behalf to make a deal.
I’ll communicate with you throughout the entire process. You’re never in the dark when you work with me.
Once the seller agrees to a deal, I’ll help lead you through removal of any conditions and closing the deal. Then, the home is yours. Congratulations!
I realize that making an offer can seem like the nail-biting part of the process. It doesn’t have to be. That’s the advantage of selecting a real estate agent who, like me, puts clients first. When you go after a property you really want, you can take comfort in knowing you have an expert on your side… someone who knows how to get that home for you.
9. CLOSING THE SALE
There are few things I enjoy more than saying to a client, “You’ve got the home!” That means that the seller has accepted your offer, conditions have been waived, the closing date has been set, and you’ll soon be preparing for moving day.
Just because the purchase has been made doesn’t mean my work for you stops. On the contrary. There are a myriad of other things I’ll do to ensure the process goes smoothly.
For example, I’ll take care of many of the administrative details on your behalf. I’ll work with the seller’s agent, your lawyer, and your mortgage lender to ensure that all the necessary paperwork has been completed and submitted.
Don’t worry about finding a good real estate lawyer, insurance agent, moving company, etc. I’m well-connected in the local real estate scene and can personally recommend reputable professionals and companies to help you.
If at any time leading up to moving day you have a question, problem or concern, I’ll be there to help. You can count on me to be your real estate agent before, during and after you cross the threshold into your beautiful new home.