BUYING A NEW HOME IN SCARBOROUGH

Buying a house is without a doubt a very complex task. However, there are steps involved in this process that makes this hectic process bearable for everyone. We are going to take a look at these guidelines and by the time you’re done, you will know exactly what to expect in the market. Scarborough is a very unique town with great homes. There are also several law firms that can provide you with the necessary legal council. Real estate lawyers in Scarborough put the needs of their clients first and ensure they also get what they paid for.

THE PROCESS OF BUYING A NEW HOME

According to investopedia.com, there are detailed steps you can follow when you finally decide to make a home purchase and this process usually cuts across for different types of home owners. Whether its your first time buying a home or your third time, there are several steps involved in this process you will have to follow and take into consideration. 

Below is what to expect when you decide to embark on the task of purchasing a new home according to Investopedia.

FIND A HOME

Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online, and driving around the neighbourhoods that interest you in search of for-sale signs. Put out some feelers with your friends, family, and business contacts. You never know where a good reference or lead on a home might come from.

Once you’re seriously shopping for a home, don’t walk into an open house without having a real estate agent (or at least being prepared to throw out the name of someone with whom you’re supposedly working). You can see how it might not work in your best interest to start dealing with a seller’s agent before contacting one of your own. 

If you’re on a budget, look for homes whose Full potential has yet to be realised. Even if you can’t afford to replace the hideous wallpaper in the bathroom now, you may be willing to live with it for a while in exchange for getting into a place that you can afford. If the home meets your needs in terms of the big things that are difficult to change, such as location and size, then don’t let physical imperfections turn you away. First-time homebuyers should look for a house that they can add value to, as this ensures a bump in equity to help them up the property ladder. 

CONSIDER YOUR FINANCING OPTIONS, THEN SECURE FINANCING

homebuyers have a wide variety of options to help them get into a home—both those available to any purchaser, includingFederal Housing Authority (FHA)-backed mortgages and those geared especially to novices. Many first-time homebuyer programs offer minimum down payments as low as 3% to 5% (vs. the standard 20%), and a few require no down payment at all. Be sure to look into or consider: 

• HUD’s resource list. Although the government agency itself does not make grants directly to individuals, it does grant funds earmarked for first-time homebuyers to organisations with Internal Revenue Service (IRS) tax-exempt status. The HUD website has details.The FHA (and its loan program) is part of HUD.
• Your IRA. Every first-time homebuyer can withdraw up to $10,000 out of their traditional individual retirement account (IRA) or Roth IRA without paying the 10% penalty for early withdrawal (but you’ll still pay taxes if you use a traditional IRA). That means a couple could withdraw a maximum of $20,000 ($10,000 from each account) to use toward a first-home purchase. Just know that if you don’t repay the money within 120 days—and you’re under age 59½—then it becomes subject to the 10% penalty. Also, you will owe income taxes on the withdrawal(s).

• Your state’s programs. Many states, including Illinois, Ohio, and Washington, offer financial assistance with down payments and closing costs, as well as with expenses to rehab or improve a property, for first-time homebuyers who qualify. Typically, eligibility in these programs is based on income and, often, on the size of a property’s purchase price.
• Native American options. Native American homebuyers can apply for a Section 184 loan.This loan requires a 1.5% loan up-front guarantee fee and a 2.25% down payment on loans over $50,000 (for loans below that amount, it’s 1.25%). Section 184 loans can be used only for single-family homes (one to four units) and primary residences. 

PREAPPROVALS AND CHOOSING LENDERS

Don’t be bound by loyalty to your current financial institution when seeking a pre-approval or searching for a mortgage: Shop around, even if you only qualify for one type of loan. Fees can be surprisingly varied. An FHA loan, for example, may have different fees depending on whether you’re applying for the loan through a local bank, credit union, mortgage banker, large bank, or mortgage broker. Mortgage interests rates which, of course, have a major impact on the total price that you pay for your home can also vary. 

Once you’ve settled on a lender and applied, the lender will verify all of the financial information provided (checking credit scores, verifying employment information, calculating DTIs, etc.). The lender can pre-approve the borrower for a certain amount. Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your  credit score, such as finance a car purchase. 

Some authorities also recommend having a backup lender. Qualifying for a loan isn’t a guarantee that your loan eventually will be funded underwriting guidelines can shift, lender risk analysis can change, and investor markets can alter. Clients may sign loan and  escrow documents, then be notified 24 to 48 hours before the closing that the lender has frozen funding on their loan program. Having a second lender that has already qualified you for a mortgage gives you an alternate way to keep the process on, or close to, schedule.  

MAKE AN OFFER

Your real estate agent will help you decide how much money you want to offer for the house, along with any conditions you want to ask for. Your agent will then present the offer to the seller’s agent; the seller will either accept your offer or issue a counteroffer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits.

Before submitting your offer, take another look at your budget. This time, factor in estimated closing costs (which can total anywhere from 2% to 5% of the purchase price), commuting costs, and any immediate repairs and mandatory appliances that you may need before you can move in. Think ahead—it’s easy to be ambushed by higher or unexpected utilities and other costs if you are moving from a rental to a larger home. For example, you might request energy bills from the past 12 months to get an idea of average monthly costs.   

If you reach an agreement, you’ll make a good-faith deposit, and the process then transitions into escrow. Escrow is a short period of time (often about 30 days) during which the seller takes the house off the market with the contractual expectation that you will buy it—provided you don’t find any serious problems with it when you inspect it.   

HAVE THE HOME INSPECTED

Even if the home that you plan to purchase appears to be flawless, there’s no substitute for having a trained professional do a home inspection of the property for the quality, safety, and overall condition of your potential new home. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. If the home inspection reveals serious defects that the seller did not disclose, then you’ll generally be able to rescind your offer and get your deposit back. Alternatively, you can negotiate to have the seller make the repairs or discount the selling price. 

CLOSE OR MOVE ON

If you’re able to work out a deal with the seller or better yet, if the inspection didn’t reveal any significant problems then you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.

Things that you’ll be dealing with and paying for in the final stages of your purchase may include having the home appraised (mortgage companies require this to protect their interest in the house), doing a title search to make sure that no one other than the seller has a claim to the property, obtaining private mortgage insurance or a piggyback loan if your down payment is less than 20%, and completing mortgage paperwork. Other closing costs can include loan origination fees, title insurance, surveys, taxes, and credit report charges.   

Congratulations your e finally a new home owner. After closing the deal of a life time, moving into your new home will feel like a great accomplishment because it is! You can always contact your local real estate agent to get the ball rolling.