If you’re looking to buy a home in Barrie, Canada, you need to know that you can get a property whose price matches twice your gross annual income as long as you turn to the right real estate agents. The amount of money that you can spend on a house depends on six aspects:
· resources that you can use for the down payment
· other costs demanded by the lender
· type of mortgage
· credit history
· present interest rates
Barrie realtors will evaluate your income, the price of the house you’re interested in and your debt to establish the amount of money that they can lend to you. Besides, they will estimate your probable monthly housing expense, and this sum includes the principal and interest payment related to the loan, home insurance, as well as property taxes. The final result is called “PITI”. In case you opt for a townhouse or condominium, the homeowner association dues that you have to pay every month will also be included in the PITI. So, the final sum shouldn’t exceed 28% of your gross monthly income. If they also include your long term debt in this sum, then the amount can reach 33%.
Evaluate the conditions of the house you want to buy
You should start by hiring a qualified real estate agent in Barrie. Make sure you verify whether there are problems like sliding, flooding, settling, soil issues, or drainage troubles. If you intend to purchase a condominium, you have to ask all sorts of questions related to covenants, restrictions, codes, and other aspects that are unclear to you.
Establish an offer
Certain persons are interested in selling their properties really fast, but note that a too low offer will probably be declined instantly. In case you’re dealing with a powerful buyer’s market and your offer is lower than the market offer, there are two possibilities: the seller will either agree to it or come up with a counteroffer. On the other hand, if you’re facing a powerful seller’s market, you will have to propose an offer that exceeds the full price. However, note that sellers will always try to obtain a higher price, so you shouldn’t let them intimidate you. You should at least try to reach an agreement that satisfies everyone.
Certain sellers tend to overprice their properties, others ask for a price that is almost equal to the one they wish to obtain, and some of them under-price their properties hoping that prospective buyers will struggle to get the house and overbid. Hence, you need to keep in mind that the advertised price of a person who intends to sell something is only the approximate amount of money that he/she would like to get. A good idea would be to investigate the factors that motivate that person to sell the house.
Certain buyers consider that proposing low-ball offers is an efficient strategy. Of course, you are free to make whatever offer you want, but note that a low-ball offer usually disheartens the seller from bargaining, thus reducing your chances to get the house. Prior to making an offer, it is advisable to check the prices that have been obtained for other houses located in that neighborhood. This way, you will know if the house is priced properly and you will be able to make a reasonable offer.
How should a down payment be: larger or lower?
If your budget allows you to do it, then you should opt for a larger down payment, thus reducing your debt. Besides, if your down payment reaches 20% or even more, your lender won’t insist on the mortgage insurance.
What should I do when searching for a home loan?
The first thing you have to do is to ask a real estate agent in Barrie to prequalify you for the loan. This way, you will be familiar with the exact amount of money that you can spend on a new home. However, bear in mind that this prequalification doesn’t guarantee you that you’ll obtain the loan. The lender will have to check your credit history, earnings and bank statements prior to offering you the loan. The majority of mortgage lenders pre-approve individuals for free. Plus, this stage of the process can even be performed online.
About the Author: This article was written on the behalf or RE/MAX Chay, a barrie real estate brokerage that is comitted to helping its real estate agents provide an outstanding service to its clients to buy or sell homes and property.