How To Buy Your Dream Home

The process of buying a home is not an easy one. Choosing your dream home is one of the most important decisions you'll ever make. So you have to prepare yourself for this process well and in advance. When buying a home, be sure to avoid some of the critical mistakes that could cost you thousands of dollars. As a Toronto realtor I know they are crucial.

1. Understand the current market value of the home. Be sure not to low-ball your initial offer. Vendors tend to give less of a counter offer (closer to list price), if they feel insulted. Understand the current market value of the home, and comparable solds. Don't forget that you can find your next home on the web, so search ALL local listings, and check out the MLS (Multiple Listing Service). You have to know that it only includes resale homes, not new developments. Most homes do not give you the actual address here, but many pertinent details.
2. Know what you are bidding on. Have your agent arrange a home inspection, as it would cost about $300.00 but this could very well be your best money spent. With detailed home inspection data, you can either adjust your offer or take a pass on a property with extensive hidden flaws. If you have the property inspected by a qualified home inspector, you will receive a full written report on the property plus estimated costs of any necessary repairs. It only takes 2-3 hours.
3. Think of mortgages. Don't forget that when you have a down payment that is almost 25%, it is usually less expensive to arrange a first and second mortgage. Determine what you can afford -- all those extra expenses are sometimes overlooked in purchasing a property.

   To calculate how much monthly payment you can afford, you need to figure your debt-service ratio. To figure it out, you have to list all your loans: car, personal loans, monthly credit card balances, plus your rent or future mortgage payment (includes principal and interest) and the applicable property taxes.

   This total should not exceed approximately 40% of your gross monthly income. Experts say that the monthly mortgage payment and monthly house taxes should not exceed approximately 30% of your gross monthly income.

4. Check into your lawyer's fees ahead of time. These are separate from disbursements. It is very important to have a reliable lawyer available when executing a transaction as important and as large as the purchase of a home. The essential tasks performed by a lawyer include searches and the title transfer. A title insurance policy can protect you against loss that could result from many potential defects that may be in your title. The policy guarantees you will never suffer loss from those defects, which could otherwise leave you homeless and with little legal recourse.