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Buying a new home
Buying a new home

What do we need to know before buying a home?

There are few things more exciting than buying a new home, especially if it’s your first. Even if you have purchased before, there is always a flurry of activity from searching for your property to submitting your best offer to going through the closing process. Yet even if you have purchased before, it may have been some time since your last real estate purchase.

During your purchase you’re going to be surrounded by experts. You’re likely working with a real estate agent who knows the market and can help explain the features of your property. A home inspector will help guide you through everything you’re not seeing in your potential purchase. If you’re mortgaging the property then you’re likely working with a mortgage professional, either a broker or agent who will guide you through the terms of your mortgage.

Lastly, there is the real estate lawyer. The real estate lawyer is there to advise you on the legal implications of your transaction, such as what you are committing to with the agreement of purchase and sale, and what your responsibilities will entail under the terms of your mortgage.

Despite all of these professionals though, you still have an important role to play in the home buying process, and your extra knowledge can help make your transaction run that much smoother. Knowledge truly is power in the home buying process – here are a few tips that can help make you even more powerful.

Get your pre-approval first

What you think you can afford, and what a lender tells you that you can afford, may be two very different things. A pre-approval will work with your current financial situation – including your income as well as any debts that you are carrying – to determine what you can reasonably afford to borrow. That, plus whatever you have saved for a downpayment, will become your budget for a new home.

In a hot real estate market, it’s tempting to try to offer that little bit extra in order to outbid your competition. Remember though that even that little bit extra can be dangerous if it’s more than you can afford. The money may seem like it’s only on paper when you’re bidding, but becomes very real when you need to make your purchase.

Shop around for a great rate

Many Canadians still believe that the best place to obtain a mortgage will be through their bank, and oftentimes banks may be able to offer the most competitive interest rate on their lending. However, for individuals who have recently changed jobs, are self-employed, or who don’t have the best credit, a bank may not be a viable option.

Instead, a mortgage broker or agent will be able to work with you and can usually help secure something that makes sense. Brokers and agents are not tied to a single lender; instead, they have relationships with dozens of lenders and can shop around to find the best rate for you. Much like lawyers, their role is to act in your best interests, and help you make the decisions that are right for you personally.

Don’t skip the conditions

When you make an offer to purchase a property, you as the buyer are allowed to place conditions on your offer. Two of the most common conditions are financing, meaning that your agreement to purchase is conditional on you being able to secure the appropriate financing, or a condition on the results of a professional home inspection.

Both of these are tremendously important, and are too-often sacrificed when buyers try to compete in a bidding war. Maintaining these conditions wherever possible can help ensure that buyers aren’t buying a house with more problems than are worth fixing, or a house that you will be unable to afford should a last minute issue arise with your mortgage. 

Save a few extra dollars

When calculating your budget for a home, it can be tempting to put every last penny into your purchase price. Unfortunately, the purchase price that you agree to for your new property is never the final dollar amount, and there are several associated costs that you may not be thinking about when you sign your deal.

Closing costs, insurance, lawyer’s fees, mover’s fees, property taxes, and other fees that come up along the way. These can range between hundreds and thousands of dollars depending on the service, and all of them will need to be accounted for before you close on your property. When doing your calculations, ensure that you have an amount set aside to cover these additional expenses. 

Your agreement is everything

If you have read an agreement of purchase and sale before (the legal agreement to purchase your home), it looks to the naked eye like standard boilerplate. However, the exact wording of that agreement is crucial, and the devil can sometimes hide in the details. That agreement is your legal contract to make the purchase, and while many of the terms may be standard, some may not be.

Your lawyer’s job is to guide you through the agreement, your obligations, the seller’s obligations and the steps required to complete the transaction in order for it to run smoothly.

Final Thoughts

Not every real estate transaction runs smoothly. Real estate lawyers have keen eyes, and are always on the lookout to help solve any problems before they spiral out of control.

That’s why it’s important to work with the right real estate lawyer for your transaction. We have strong relationships with brokers and agents throughout the Cambridge, Kitchener, and Waterloo region, and work closely with them to help ensure that your purchase runs smoothly. Next time you need a real estate lawyer, we would be glad to help. Contact our office today to set up a consultation.