Buying

Ready to buy? Get all the information you need to make your BEST decision

Congratulations!  You have decided to purchase a home, or are thinking about buying one.  You’ll be joining the ranks of hundreds of families who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family.  When you own your own home, your hard-earned dollars contribute to your mortgage. The equity you earn is yours.  Over time, your home will increase in value.
buying your first home with Ben Lovatt
Buying a new home is an exciting milestone! Below, you’ll find the information you need to make a wise buying decision.  I’ll walk you through the planning process step-by-step , to help you determine which home is right for you.  You’ll find all the information you need on mortgages, viewing homes, the offer, closing details and moving.

Have questions? Contact me buying a home in Barrie, Alliston, Orillia or anywhere else in Ontario.

Call Ben
Email Ben

Buying your first home.

Selling a home costs money.  If you potentially may have to move in the short term, the value of your home may not have appreciated enough to cover the costs of buying and selling.

The length of time that it will take to cover those costs depends on various economic factors. Average appreciation tends to sit at around 5% per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs.  The real estate market can be particularly volatile, however, and dramatic swings up and down are not uncommon.

What features do you require in a home to satisfy your lifestyle now? Five years from now? People tend to remain in homes longer than they initially intend, primarily due to the work and expense associated with moving.  Therefore it is worth considering a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, people with poor credit tend to pay far more to borrow.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. It is, however, important to stay within your comfort zone.  Purchasing a house involves many up-front and ongoing costs, and the stress of worrying about those costs often outweighs the satisfaction that may come from owning a slightly nicer home.

To determine how much home you can afford, talk to a lender or go online and use a home affordability calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36” rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation.

The “28/36” rule means that your monthly housing costs can’t exceed 28 percent of your income and your total debt load can’t exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential, and other factors, lenders can push the ratios up to 40-60% or higher. While we’re not advocating you purchase a home utilizing the higher ratios, it’s important for you to know your options.

Typically, homebuyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk for a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender. High-ratio mortgages can be a good option for those who haven’t managed to save a large chunk of money (who has?), but naturally, these have additional costs associated with them.

Maintenance, improvements, taxes, and insurance are all costs that are added to a monthly house payment. If you buy a condominium or townhouse, a monthly homeowner’s association or maintenance fee will be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your Realtor® and your lender aware of your desire to limit these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

Avoiding common buyer errors.

What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Your own research is important, as is the assistance of a Realtor®.  A professional Realtor® can offer an unbiased opinion on the value of a home, based on many factors and a great deal of information. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.  Hire the right person and trust that person to represent your interests.

What do you need and want in a home? Sounds simple, but clearly identifying your needs and bringing an objective view to home shopping leaves you in a much better position. How much space do you really need?  Too small and you may feel like you live in constant clutter.  Too big and maintenance may become too daunting.  Outline all of your priorities, and work on finding not just a great home, but buying a great home for you.

Before you sign any document, be sure the property you are considering is free of all encumbrances. As a part of his or her services, a Realtor® can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements against the title.

Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbor’s new fence which is extending a boundary line, etc.), and will guarantee that you are indeed getting what you pay for.

For $300 – $500, a professional inspector will conduct a thorough inspection of the home. Their expertise can mean the difference between uncovering major flaws before or after you own a home. Make the final contract subject to the report’s findings.

It only takes a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.

Besides the funds for the purchase of a home, you’ll need funds for items such as loan fees, insurance, legal fees, surveys, inspections, etc.

Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing, or even the sale if you attempt to push things through too hastily.

Do you NEED it?

Also referred to as radiant heat, in-floor heating is a brand new invention.  Well, except that the Romans did it a couple thousand years ago by channeling hot air under the floors of their villas.  And Frank Lloyd Wright did it in the thirties with hot water, but other than that . . .

For:  In-floor heat comes in two primary forms: hot water heat and electric heat, and there are many advantages.  The dramatic energy savings promised shouldn’t prompt you to ask for a decrease in salary just yet, since the more popular hot water radiant heat usually requires a second hot water heater and won’t shave too much off of your bill, but there are some notably appealing elements to in-floor heat in general.  Radiant heat is just that – even and consistent, without the up-and-down temperature shifts associated with most conventional heating systems.  It’s also silent and invisible, with no bulky radiators or even register vents ruining the feng of your shui.  Radiant heat also won’t dry the air, and won’t have you hopping about looking for your slippers on a cold morning.

Against:  In-floor heating systems are still considered a luxury, and can add a fair bit to the value of a home.  They are new, and potential long-term issues have not been entirely worked out.  A handful of people also are leery about the prospect of piping a significant amount of water throughout their cherished home for fear of potential leakage.  All relatively minor concerns.

Assessment:  Find someone with in-floor heating who doesn’t love it.  I dare you.

When you’re buying a home, THIS is the quintessential luxury item that announces once and for all that you are a big dog, even in parts of the country like this one where it can only be used about ten minutes per year.  It is the swimming pool.  From pools that are little more than big pits of standing water to jewel-encrusted infinity pools that usually adjoin large bodies of water, pools were once the thing.  Are they still?

For:  A 2004 4-state NAR study found that having a pool increased property values from 8 to 15%.  The idea of kicking back all summer with a piña colada, sitting next to the lapping water with friends can be quite attractive.  And rightfully so.

Against: Safety issues have not been blown out of proportion by the media.  Pool deaths happen all the time, there’s no getting around that fact.  Pools are expensive to maintain, even without hiring a pool cleaner, and are a lot of work.  As beautiful as a pool can be when it is maintained properly, it can be an eyesore if it is not.  A pool tends to negate having any significant usable space for a backyard.  Am I missing anything?

Assessment:  The issues involved with owning a pool can be overcome, and many people enjoy having a pool very much.  You just have to want one really badly for it to be worthwhile

Kitchens do cool things these days.  Appliances paneled to look like cabinets, an extra tap above the stove for filling large pots of water, $15,000 pounded-copper range hoods, and 460 different countertop materials . . .

For:  Kitchens are finally being designed with maximum utility in mind.  When shopping for a home, focus on the kitchen – it is where you will likely spend a great deal of your time, and the room in which every party tends to congregate.  Before you fall in love with that Kohler faucet, however, analyze the kitchen’s layout from a purely utilitarian standpoint.  Is the magic triangle of sink-stove-fridge arranged conveniently?  Are cabinets and other storage in logical places?  Is there sufficient light?  And most importantly, is this a space you will feel comfortable and happy in?  Don’t underestimate the importance of a functional and attractive kitchen.

Against:  Be careful not to fall in love with the impermanent fixtures in a kitchen.  While those glass-front, backlit uppers may brilliantly display the seller’s Royal Daulton bone china, will your mixed collection of garage sale Melmac have the same effect?  Likewise, if your idea of cooking is heating up last night’s pizza, perhaps space would be better used elsewhere.

Assessment:  The kitchen is the hub of virtually any home.  Don’t underestimate its importance.

This is an overly broad categorization, of course, but activity rooms like workshops, games rooms, and exercise rooms tend to hold common appeal – and common drawbacks.

For:  Having the right setup for a particular activity can be inspiring.  Having a single power tool in each room of your house and each corner of the garage and shed is not exactly the ideal situation for building that crib you started on for your daughter and are determined to finish before the birth of you granddaughter.  Likewise, if you have the latest elliptical trainer and weight set in a room next to your bedroom with a 12 foot plasma TV facing it, perhaps you will find that six-pack after all.

Against:  If you can’t make a dovetail joint, all of the tools in the world will not give you that knowledge.  If you haven’t lifted anything heavier than a handful of pork rinds in the last decade, a workout room will likely soon become just a TV room with uncomfortable seating.  Unreasonable expectations usually develop into unreasonable decisions.

Assessment:  Your home should inspire you and will, to a certain extent, dictate your lifestyle.  Be rational in your decisions, however, and aim for versatility rather than rooms that are locked in to a particular use that may not be as useful in the future.

The Bottom Line

With all of your dream home features, try to let reason prevail (or at least get a word in edgewise).  You may absolutely worship the tumbled marble rainforest shower with the heated towel rack, but it will be of little comfort every morning and night when you are cursing the home’s lack of closet space.  It is often the most boring attributes of a home that will give you the most pleasure.

Now, off to luxuriate in my rainforest shower.  I had to take out the bedroom to install it, but that’s okay, I don’t mind sleeping in the kitchen . . .