Unsure How to Find the Perfect Home?

by PJ Wade, moneysense.ca

PJ Wade is a leading authority on the Maturing Marketplace (Boomers and Seniors), author of several books including "Have Your Home and Money Too" and "Caring for Your Aging Parents," and a popular speaker on retirement issues.

Worried that what you don't know will cost you money or cause you to settle for less?


"Act in haste, repent in leisure" describes the home-buying experience for too many condominium and house buyers. Adopting a "hurry up and wait" approach can save you time and money and ensure you find a home that you can build your life around.

Do your homework as quickly and thoroughly as you can. Then keep busy waiting for the best opportunity to present itself.


New homes

If you want to buy a new home, "waiting" means visiting new developments and researching planned housing projects in your chosen neighborhood(s). Local municipal planning offices can bring you up to date on projects in the area.


Resale homes

If resale condominiums or houses appeal to you, "waiting" involves staying on top of new listings and keeping in touch with your buyer-agent realtor.

Homework that gives you an "A" in home-buying:

Establish your buying power before you look at homes. Impulse buying is expensive.
Home ownership does not automatically mean living a "house-rich, cash-poor" existence. Couples should consider basing their home purchase on one salary or one and a half, instead of maxing out. Unexpected layoffs or downsizing have cost many homeowners dearly. Singles can double up and extend their buying power. Solos, singles or couples may decide to rent out part of the home to subsidize mortgage and tax payments.


How much money can you borrow?

Here's a rough approximation:

If you're debt free, 30 per cent X total income = mortgage payments (that's principal and interest) + property taxes.
If not, 34 per cent X total income = mortgage payments + property taxes + loan payments.


Take the time to understand mortgage terms

The urgency associated with financing home-buying often catapults buyers into mortgage contracts they do not understand. Interest rates are the tip of the mortgage iceberg. Prepayment and portability privileges may save you thousands of dollars over the years ahead or when it's time to sell.

Don't start and stop with your local bank. Investigate the lending terms at all area lenders including smaller banks, credit unions, insurance companies and mortgage brokers.

Pre-approval identifies your "buying ballpark" but does not guarantee you'll get the full amount of the mortgage. Be cautious about making a firm offer on a home based entirely on the pre-approval. A conditional offer will give you time to get a firm commitment from the lender. Ask questions and read the approval agreement carefully so that you don't get caught scrambling for money at the last minute -- a stressful and usually expensive approach.

Keep the following guidelines in mind:

Select your neighborhood before you look at specific homes. Local Realtors can help you identify which locations fall in your price range. Get to know the neighborhood and its people. Shop there. Stroll the streets. Go to local events. Enterprising buyers may even decide to advertise their intention to buy in the area.

Note that all resale property should be purchased subject to a home inspection. Be sure to use qualified inspectors, especially if structural problems or termites are a possibility.

Don't defer decision making to a salesperson. Rely on your own judgement.