Tips on How to Buy a Good Home at a Good Price
Factors to Consider Before Taking a Mortage Loan for Buying a House
May 6, 2009
Buying a home is one of the biggest financial and lifetime decisions people make. Banks and credit institutions may be ready to offer mortgage loans and the benefits of home equity loans and mortgage refinancing may be attractive, but if the essential processes for home acquisition are not known and followed, one may end up not buying a good house or buy a bad home at a higher price.
Before going in for a mortgage, therefore, prospective home buyers should go through the following essential processes in order to make the best buy, avoid mortgage problems and bad property investments.
Knowing Mortgage Finance Capability
Banks and other financial institutions may be ready to provide low interest mortgage loans. But before one decides to access such facilities for buying a house, it is important to know one's credit capabilities. A prospective house buyer can contact a mortgage lender to request pre-approval, a certificate indicating how much of a house one can afford to buy. Real estate agents and experts estimate that prospective homeowners are usually capable of paying for property that may be valued at 250 percent of their annual income.
As stated in an article, " Home Buying in Canada" published by OneStop Canada, a real estate firm, the first step in the home buying process is to find out how much one can afford in terms of mortgage. When one's credit score indicates a positive finance capability, then one can go ahead with the purchasing process. As indicated in a Canada Mortgage and Housing Corporation publication, "Home Buying Step by Step," one needs to know if they are financially ready for a mortgage.
Good Mortgage Market Information
Having a good knowledge of existing market conditions allows one to make a good decision on when to go in for mortgage. "You should know whether you are in a buyer's market (a situation where there is low housing demand and high housing supply) or in a seller's market (where there is high demand for houses and low supply)," a publication by Canadian Homes For Sale titled, "Buyer's Tips," advised prospective home buyers.
A period of high supply and low housing demand may offer prospective owners the opportunity to negotiate for a good price. But buying during a 'buyer's market' period may have its own downsides. Real estate agents and experts should therefore be contacted for guidance and for mortgage market information.
Deciding on an Ideal Type of Home
The following guidelines and questions suggested by Canadian Homes For Sale in the "Buyer's Tips" article are essential for decision making:
- Write down what you need in a house
- Where do you want to live and in what neighbourhood?
- Do you want a new home or a resale?
- How many bedrooms are needed and what other facilities are required in a house?
- Single family home, a condominium and a townhouse which one is preferred?
Touring Listed Homes
The prospective home owner needs to tour as many listed homes as possible before deciding which house to buy. It is recommended that while touring listed homes, notes should be taken on what one likes and dislikes about each house. The notes should include the visible conditions of interior and exterior decorations, lot size, state of the house, roofing, plumbing, heating system, among others. After the tours, the notes should then serve as a guide for choosing the best home with the ideal conditions.
Mortgage Contract and Payment
Before entering into any contract, it is crucial to seek professional legal advice. It is also important to get expert opinions from real estate agents. The listed price of a house should not be a barrier to useful negotiations. Good negotiations are helpful for getting a good real estate deal.
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