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.