10 Common Mistakes Made by Home Buyers
And how to avoid them
1. Not
reviewing your condo documents.
Buying a condo comes with a ton of paperwork. Most
purchasers don't understand all of the documents so it's important to consult
your real estate lawyer. You have a ten-day cooling off period so at least take
the time to read through the previous year's condo board meeting minutes to be
aware of any issues.
2.
Choose the right professional for you.
It's important to get proper advice from
professionals about all of the products and services available to you before
you make a commitment. Your team consists of a Realtor, a mortgage professional
and a lawyer. Ask friends and family for referrals.
3.
Paying attention to the wrong details
Borrowing a large amount like a mortgage, is a big
commitment so make sure you understand the documents before signing. Take the time to go through all the details
with your mortgage professional and make sure you have a thorough understanding
of the commitment you are making.
4.
Ignoring your credit
Not only does it qualify you for best rates on
everything from car loans, credit cards and mortgages, but even landlords are
looking at credit for rentals. If you want a mortgage, talk to a mortgage professional
about credit scores and what you need to qualify for best rates.
5.
Not getting pre-approval
There's nothing worse than putting in an offer on a
home, then not qualifying for the financing. Avoid this by getting
pre-approved. A mortgage professional can lock in your rate for up to 120 days.
Do be advised that even if you are pre-approved, the property and supporting
documentation still needs to be approved by the lender.
6.
Throwing out important documents
If you plan on applying for financing soon, be
prepared to provide documentation confirming the details you stated on your
credit application- most important are income documents such as pay stubs, tax
returns and Notice of Assessments. Other important documents are ones showing
credit clean-up.
7.
Avoid excessive transferring between bank accounts
Under the Canadian Anti-Money Laundering Act, you are asked to confirm that the down payment
is from your own resources. To do that, you need to provide a 90 day history of
the funds to show that they were not deposited all at once. Be aware if you are
moving money between accounts, you will be asked for transaction histories from
ALL those accounts. If you are unable to prove where large amounts came from,
those funds MAY NOT be used towards your down payment.
8.
Over-estimating your income
Before you begin the process of applying for
mortgage financing, make sure your mortgage professional knows exactly what you
do and how much you earn. This is especially important when you are
self-employed, or are paid bonuses or overtime.
9.
Low appraisal value
An appraisal may be required when purchasing a home
or refinancing a mortgage. If the appraised value of the house does not support
the purchase price or estimated value of the home, your mortgage approval could
be reduced or withdrawn, or if you still want to proceed, you'll need a larger
down payment.
10.
Tight timelines
Getting a mortgage is a process that should not be
rushed. it's a big commitment. If possible allow at least 5 to 7 days for the
financing condition to be removed from the Offer to Purchase. Since there are
many parties involved in the mortgage registration process, make sure the
closing date is at least 20 to 30 days from the date of the offer.
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