Things you should know about buying a home
Although home ownership is a goal of most Canadians, there
are both pros and cons of being a homeowner. Here are three
of the negative aspects:
- When you own a home, you are responsible for
maintaining it, which can take up a large amount of time.
When you rent, it's the landlord's problem. Of course, owning
a condominium lets you enjoy the advantages of owning without
the maintenance. But you do pay for the privilege.
- When you own a home you're not as mobile as
you would be if you were renting. Depending on market conditions,
selling a home can take a long time, so if you plan to move
around a lot, renting may be better for you.
- When you own a home you have your money tied
up in it. And although real estate has provided roughly the
same growth as the stock market, it does not provide the
same amount of flexibility. However, a homeowner can usually
access required funds for investing through a line of credit.
On the other hand, there are powerful and compelling reasons
to buy a home. Pride of ownership, opportunity for capital
appreciation, freedom to do whatever you like with it and
a feeling of security.
If you have decided to buy a home, here are a few things
- The first thing to do, even before you start
looking for a home, should be to arrange for a pre-approved
mortgage. That way you'll know what you can afford and you
can negotiate your purchase in confidence.
- Make sure you've got enough to cover fees and
closing costs. These may include the appraisal fee, loan
fees, attorney's fees, inspection fees and the cost of a
title search. They can easily add up to $5,000 to $7,000
-- and often run to 5 percent of the mortgage amount.
- Because of the high costs of buying and selling,
unless you're planning to stay in your home for at least
4 to 5 years it may not be a wise decision. Of course there
have been times when the real estate market has increased
so quickly, it would have paid handsomely to buy and sell
over one year.
- Be sure to research the area in which you're
looking. Talk to neighbours. Visit schools. Check on future
development. That beautiful wooded area across the street
could be slated for a shopping mall. In a nutshell, you want
to be aware of and consider all issues that could affect
the resale price.
- Remember that most real estate agents have
one goal - to make a sale. Just be aware of this when an
agent gives you advice. Many agents may have your interests
first in mind but many will not. You'd be wise to ask for
referrals so you can have more faith in your agent.
Always use a home inspector before you make an offer. Again,
ask for referrals. And always do a walk-through the day before
the close to ensure that all is as it should be.
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