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Making the Final Decision
Making the final decision
when buying a home is like jumping into a freezing cold lake of an unknown
depth. You know it’s going to take
guts, but you also know it’s going to be refreshing.
Before you make that plunge
you are going to want to be as confident as possible. Most experts agree that the best way to do this is to get a
comprehensive checklist together, go down the list and make sure that all of
your bases are covered.
This is after all a huge
investment; you are going to want t get the maximum capital return on your
investment as well as having a dandy place to live. There is also the factor of timing, something that in many ways is
completely out of your control.
Listed below is our detailed
sample checklist. Use this as a guide for your own venture and feel free to add
your own variables. For instance, we
haven’t mentioned ghosts. If you are
scared of ghosts or other paranormal activity you might want to ask the
previous tenants if they had any trouble.
The Checklist
Where:
Overall, where do you want to live? An urban area, suburb or rural area.
Make a short list of neighborhoods that fit that
description.
What amenities do you need. Work, schools,
shops, recreational facilities.
When you look out of your window what do you
want to see. Trees, water, a
beautiful skyline or a sunny garden.
Where you will live is one
of the hardest decisions to make because it is almost completely up to
you. There is a delicate balance that
must be maintained. Obviously there are
places where you want to live, but can you afford them? Chances are, if you really want to live
there, so do a host of other people.
This situation may drive up the price of the home well beyond market
value.
If the location is
overpriced, it still may be a good investment, but it will take a longer time
before you know just how much it will pay-off. Also, trendy neighborhoods can
witness a much higher taxation rate, so the house could become a financial
liability in the future.
On the other hand, if you
choose a location that few people want to live in, chances are it may stay that
way, and you might have a hard time selling the home. If it is a fixer-upper, make sure you have an accurate assessment
of what it will cost to renovate the property.
Factor this into your calculations.
What:
Price range
Type of home e.g. freestanding house, terrace,
townhouse, unit
New, used or old
Renovated or not renovated
Style preferences
Number and size of bedrooms
Other requirements such as family room, more
than one bathroom, formal and informal dining areas, a home office, space
for your hobbies/interests
Yard or balcony
Access for vehicle, parking
Unlike ‘where’, you have a
little more flexibility withy ‘what’.
Besides load bearing support walls, most homes are open canvas’ that can
be torn down and rebuilt in whichever image you choose.
If you think you know what
you are doing, you can do all of this over the course of time, on your own, for
a fraction of what it will cost a contractor.
It also means that you can tailor your home to your specific needs.
Most experts agree that it
is a good idea to renovate based on your personal preferences, not what you
think the market will want when you resell your home. NO renovation can
guarantee a 100% return on investment.
Most of the value you will get out of a renovation comes from the
comfort YOU get from it. Any value
added should be welcomed as bonus.
When:
When will you have enough cash on hand to pay
for a down payment?
Have you obtained the mortgage plan that you
want?
Is the market right? In other words, is the appraised value of your home on par
with the market price?
In many ways you have the
least amount of control as to when you buy a home. After all, you only make a finite amount of money at a job, and
if that has to be saved for a down payment, things can take a while.
Also be sure to remember
that there are many hidden costs when buying a home. For instance, on average you must add 5% to your budget on top of
the cost of your home when you are buying.
Hidden costs include:
Paying inspectors
Moving costs
Legal fees
Stamp duty
Also, the market may be
terrible. Generally today, the market
is really good for buyers. Home
building is at record highs and this competition makes for better mortgages and
cheaper homes. But, the market can
change in a heartbeat, so be careful. You can wait for the market to get better
forever.
You also want to get a mortgage
that is right for you. Most banks will
offer a fixed mortgage. This can be a
scary commitment. It means that no
matter what happens to national interest rates, you will be paying the same
interest rate for the entirety of your mortgage. Today, some banks will offer you a split mortgage that is both
fixed and flexible.
The Recap
The following is a list of
the top ten things you should do to make your search for a home a smart search.
Get informed. Do lots of research.
Start saving your deposit as soon as you can.
Try not to buy around the top of a boom in
property prices.
Location and special features are the most
important factors in choosing your home.
Dont get your heart set on any particular
property - it will impair your judgment. If you miss out on one, you will
in time find something as good or even better.
Always check the condition of what you are
buying with a property inspection.
Shop around for a loan. Also, choose your legal
advisor and building consultant carefully and make the most of their
advice and expertise.
Before making the final decision, ask yourself
whether you could easily resell the property in the worst economic times.
Never
sign anything in haste and if you dont understand what youre signing get
your legal advisor to explain it to you.
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