Title

The Seven Biggest Mistakes You Want to Avoid When Buying A Home In Wasaga Beach!!

7 great tips from Sarah Hurson at TMG

Mistake # 1:  Not being properly approved.

A lot of people think they are already approved, and in theory, they are.  But You MUST have a commitment in writing from a reputable financial institution clearly stating the terms and condition of financing.  Verbal promises mean NOTHING.  And your written approval MUST outline these four things:

1.    Amount you are qualified for.
2.    Guaranteed interest rate.
3.    Monthly principal and interest payments and most importantly.

4.   The conditions you must meet to qualify for the mortgage.

Your mortgage specialist can help you with all this – as well as help you find a budget you are comfortable with.

So what’s the big deal about getting a pre approval?  For one thing it gives you more negotiating power as a buyer.  Imagine the seller with multiple offers on the table, but you are the only one who submitted a pre approval along with your offer.  Chances are, the seller would favor you over all the others.  On the other hand, failure to get a proper pre approval could cost you your dream home.

Mistake # 2:  Shopping directly with your bank

This may shock you, but 50 percent of the people paying the highest rates are clients who have been the most loyal to their banks!

You’d expect the banks to reward their most loyal customers with a competitive rate.  But don’t count on it.  Instead, they typically offer their worst rates to the most loyal, longtime customers – because it’s easy money for them!   In fact, this is one of their most profitable strategies.  Don’t let them pull the wool over your eyes.

If you want a fair rate – you’ve got to do your research.  You’ve got to play hardball.  But you don’t have to face your bank alone to get the best mortgage deal.  Remember that there is NO CHARGE to have a seasoned mortgage specialist from our firm negotiate on your behalf.

Mistake # 3:  Insisting on having your mortgage with a specific bank

Many people unwittingly wind up paying a higher rate because they want to deal only with a certain bank.  This is understandable, especially in these uncertain times.  You want to be sure your mortgage and your home are secure.  But here’s a little known secret the banks don’t let you in on.

Most, if not all of the other lenders are funded in part or completely by Canada’s six major banks.  They do this to scoop up deals with educated clients who demand lower interest rates without blowing their cover to the people who will pay without question.  It’s like a drug company that will sell you their brand name products for twice the price although they sell an identical product under a different name.

If you have an opportunity to get a lower rate from a lender you haven’t heard of, don’t hesitate to consider it.  You are just as safe and protected as if you signed on with one of the major banks.  This is because all lenders large and small are governed by the same Canadian laws.

Even in the worst-case scenario – your lender goes out of business or gets bought by another.  Under Canadian law, the new company has to honour all of the original terms and agreements. With us, you get to decide which one of Canada’s 30 leading mortgage lenders you will do business with.

Mistake # 4:  Not budgeting enough money for closing

Possibly the worst mistake you can make when buying your new home.  And sadly, it shows its ugly face at the worst possible time.  It’s  3 days before you get your new home. Your lawyer calls and requested thousands of dollars more than you anticipated for the closing cost on the house.

Where on earth are you going to get this kind of money at this short notice?

The Canadian Mortgage and Housing Corporation (C.M.H.C) recommends that you save at least 1.5% of the purchase price to cover your closing costs.  But to be safe we suggest you put aside 2% to 2.5%.  That way you can rest easy knowing you will not be caught off guard.  It’s far better to have it and not need it than need it and not have it.

Mistake # 5:  Choosing the wrong home inspector

This one can be a real nightmare if you’re not careful.  The government does not regulate home inspectors and the same house can get vastly different reports from different inspectors.

When I sold my last home, I had two inspectors come in.  According to inspector number one, my home should have been condemned.  He found so many problems that my potential buyer took off like a scared rabbit.

Inspector number two found absolutely NOTHING wrong with the house.  It was perfect.  Pristine.  Nothing to do but move in and relax.

The truth?  Somewhere in the middle.  No, the house was not falling apart.  But like any home, it needed a little work.

Now here’s something to keep you awake at night…

Both of these inspectors came highly recommended as professionals in their field!  Scary isn’t it?  So does this mean that you should forget the home inspection altogether?  Of course not.  But you’ll definitely want to check out an inspector before hiring him or her.  If at all possible, try to find your inspector through a referral from a trusted source rather than flipping through the Yellow Pages.

Mistake # 6:  How buying mortgage insurance from your mortgage lender could carry unexpected Risks

When you get your mortgage, your bank or lender will push very hard for you to sign up for insurance.  Don’t do it.  Insurance is crucial, but you want to get it from a different company.

One family I know had their mortgage and insurance with the same company.  This gave the bank so much power they were able to steal the family’s home right underneath them when the husband became terminally ill.

Unable to work, he fell behind in his payments.  The bank then demanded full payment of the arrears of both insurance and mortgage and threatened to lapse the policy if the family didn’t come up with the money right away.

When the family couldn’t pay, the banks lapsed the insurance policy and refused to pay out the mortgage upon the husband’s death.  The grieving family lost not only their husband and father – they lost their home to foreclosure!

I cannot urge you strongly enough to get your insurance with a completely different company to protect your home.  Another pitfall to be aware of is that some banks will demand a medical on any refinancing of your mortgage.  Then they could cancel the insurance based on the results.  You may be better off seeking the advice and guidance from an Insurance Broker who can tailor your insurance policy to your needs.

Mistake # 7: Procrastination: how waiting for the last minute can cost you more than just money

So many people leave their mortgage shopping until the last minute – only to find themselves stuck with a very high interest rate.

This entry was posted on Saturday, October 31st, 2009 at 4:49 pm and is filed under Financing, The World Of Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Tony Orlando said at October 31st, 2009 at 5:00 pm

   I discovered your homepage by coincidence.
   Very interesting posts and well written.
   I will put your site on my blogroll.
   

Leave a Reply