by: TONY & LEDI ALUSHI REAL ESTATE - BUYING YOUR FIRST HOME

BUYING YOUR FIRST HOME

by: TONY & LEDI ALUSHI REAL ESTATE

Table Of Contents

Owning vs. Renting

Needs and Desires

Getting That First Mortgage

Common First-Time Mistakes

Searching for the Right Home

Steps to Buying a Home

Hire an Agent or Buy Alone?

Dos and Don'ts of Negotiations

What to Know About Home Inspections

10. The Closing Process

11. Moving Tips for the First-Timer

12. Real Estate Horror Stories

Foreword In real estate, it’s rare to find a team that not only achieves extraordinary success but also uplifts everyone around them. Tony & Ledi Alushi are such individuals—and it’s an honor to write this foreword as their coach and witness to their exceptional journey in the industry. Tony & Ledi’s dedication to their craft and clients is truly unmatched. Together, they bring a powerful blend of experience, professionalism, and heart to everything they do. Whether navigating complex transactions or guiding families through one of life’s biggest decisions, they lead with integrity, clarity, and care. As their Platinum Coach, I’ve had the privilege of seeing their growth and passion firsthand. They approach every challenge with a solution-focused mindset, always striving for the best possible outcome for their clients—while maintaining the highest standards of service and ethics. Their clients trust them not just for results, but because they genuinely care. If you’re considering hiring Tony & Ledi as your agents, know that you’re in extraordinary hands. Their proven systems, tireless dedication, and client-first approach make them one of the most respected real estate teams in the business. With Tony & Ledi on your side, you’re not just getting agents—you’re gaining trusted advocates and partners committed to your success. Success isn’t just a possibility with Tony & Ledi—it’s a guarantee.

Sincerely, Marc Gastineau Realtor/Coach One Realty Group

CHAPTER 1 Owning vs. Renting

Owning your own home may be one of the defining qualities of the Canadian Dream, the set of ideals that includes opportunity for prosperity and success, and an upward social mobility for the family and children, achieved through hard work.Homeownership has long been considered one of the strongest representations of that vision — 68% of Canadians own their own home, and many more hope they will or wish they did. Something about homeownership plucks a strong chord with Canadians. Financial security, permanency, status, or pride; whatever the reason for wanting to own your own home, there has never been a time in recent memory when the health of our credit reports has meant so much as when we decide to buy a home of our own. Lifestyle plays a big role in the decision to own versus rent. Home-buying is most often driven by household formation, such as marriage and childbirth, but not always: for the millennial generation, the primary reported reason for buying a home is owning a dog. Age is also a major factor in general: less than 40% of people under 35 years old own homes, while 60% of people over 35 years old own homes, and more than 80% of people 65 years old or older own homes. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs associated with purchasing a home. As they build careers, save money, and start families, many choose to buy a home, recognizing that homeownership as opposed to rental living better accommodates their growing family needs. Their 1

needs may be better filled by a single-family house, condominium, townhouse, or duplex of their own. At the other end of the age spectrum are homeowners nearing retirement who may now desire to sell their homes, downsizing and avoiding the maintenance and other obligations of homeownership by renting.

WHICH IS BEST?

Is it better to rent or buy a home? Virtually all adults ask themselves this at some point as they form their goals and plan for the years ahead. Owning and renting each have their advantages, but what is best for you depends on your circumstances. Before you decide, here are some things to ask yourself. • How long will you stay in the home? Each market is different, but whether the time you plan to spend in the house warrants its purchase can be predicted. In general terms, it takes four to seven years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and cost of ownership). If you are thinking about buying a home and selling it in two years, it is very unlikely that buying will be cheaper than renting. • Do you think of or need your house as an investment in your retirement plan? Canadians are used to their homes being a store for wealth they can liquidate in retirement as part of downsizing their lifestyle. A cautionary note though — although home prices have recovered from their pre-2007 market slump and continue to rise, the price of your home can still fall.

• Are you financially ready? Owning a home is a financial commitment that requires planning how homeownership will fit into where your life is headed. Ask yourself what your budget is and if either buying or renting would require you to stretch your finances. Crunch all the numbers. A frequent mistake of first-time homebuyers is comparing a month’s rent to a month’s mortgage payment. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association fees, and maintenance. • Are you prepared for the down payment? This is the lump sum payment that funds your equity in the property (how much of the property you actually own). Down payments vary; 20% is preferred and gets the best rates. There are some mortgages that allow down payments as low as 5%. Sometimes, relatives contribute to the down payment. If you have an opportunity, take a gift rather than a mortgage because lenders will add that debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a mortgage. • Can you afford the monthly mortgage and its components? Generally, a mortgage includes mortgage principal and interest (both amortized over the life of the mortgage). You must also consider the cost of homeowner’s insurance and property taxes. These items can affect the monthly payment by several hundred dollars. • Are you emotionally ready? Can you handle the stress? A big factor to consider when buying a home is stress. The

Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that go along with buying a home in the top 43 most stressful circumstances in life. Four events are specifically home-related: change in financial state (No. 16), large mortgage or mortgage (No. 20), change in living conditions (No. 28) and change in residence (No. 32). If someone has recently made other life changes such as marriage (No. 7), switching careers (No. 18) or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, which can destroy your credit or even make you lose your home. It’s better to rent if your life is in flux, and then buy when your stress levels are lower. • Are you ready for commitment? Are you ready to make lots of decisions, from picking a real estate agent to picking paint colours? Are you confident enough to choose a neighbourhood where you believe home values will continue to appreciate in value and that will serve your needs (e.g., proximity to schools, shopping, recreation, etc.)? Are you ready to devote the time and attention to maintain a home (e.g., leaf-raking, grass- cutting, appliance maintenance and repair, etc.)? Taking care of your investment can be gratifying, but only if you are prepared.

ADVANTAGES OF BUYING YOUR HOME

• Control over housing expenses. By selecting a fixed-rate mortgage over a variable mortgage rate, the homeowner has assurance that housing costs will not increase in the next 5-year mortgage period.

• You build equity. Some of each monthly mortgage payment goes toward the mortgage’s interest. Other portions may go toward property taxes to the city. The remainder pays down the mortgage principal. Every dollar put toward your mortgage’s principal represents a dollar of equity (the difference between the current fair market value of a property and the amount of debt owed against it). Further, the property should appreciate in value each year, adding to equity (what the house could be sold for versus what is owed on it). • Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its mortgage- to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and curb appeal, while potentially boosting its value. • Current mortgage rates are relatively low. Interest rates rise and fall through the years. Several years ago, interest rates were higher, and it was more expensive to obtain a mortgage. Since these costs have been reduced, it is now easier and less expensive to own a house. • Ownership rights and creative freedom. Your decorating and home improvement choices are just that — yours, provided they don’t break building codes or violate homeowners’ association rules. You can paint walls any which way, add fixtures, update or finish your basement, or build a patio or deck. Changing your environment to suit your whims is a freeing aspect of homeownership. • A sense of belonging to the community. Homeowners

tend to stay in homes for longer than renters and are more likely to grow roots. They might join a neighbourhood association or sponsor block parties, volunteer at a nearby community center, join a school group, or align with a business improvement district. Renters might not do any of those things, particularly if they know their lease is up in a year and they might move. There is an intangible pleasure attached to owning your own house, a sense of freedom and independence. The home you live in belongs to you and only you (and, perhaps, your spouse), and you can do what you want with it. You are not daunted by increases in rent or the risk of losing your lease. You are free to make improvements and changes. Also, owning your home gives your children the guarantee of attending the schools in the area on a more permanent basis; you never have to worry about a notice from the landlord to vacate your rented house or apartment for any of a variety of reasons over which you have no control.

ADVANTAGES OF RENTING

It seems a shorter list, but one man’s pro is another man’s con, and there are definitely advantages to renting you should factor into your buy-rent decision. • No responsibility for maintenance. Admittedly, this is a big one. As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person — you just call your landlord or superintendent. Renters in condos, townhomes, or apartments do not have lawn and grounds 6

care obligations. • Relocating is easier. When renting, relocating for work is easier. Though a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or talking with your landlord. On the other hand, selling a home takes time and effort. If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment. • No real estate market exposure. Home values fluctuate and can decline over time. If you’re a renter, that’s not your problem. If you’re an owner trying to sell — it is.

DISADVANTAGES OF OWNING

• Maintenance. The renter’s largest advantage may be the homeowner’s largest disadvantage. While insurance is available to protect against expenses from major catastrophes, everyday maintenance items are on the homeowner’s dime. Maintenance and repair can be as simple as repainting the baseboards or as extensive and expensive as replacing an H/VAC system or sewer pipe. The expense will vary from year-to-year; however, you can expect to pay about one percent of the value of your home annually toward these expenses. If you live in a $750,000 home for 10 years, that’s $75,000 over the period, and possibly more if you must replace a costly, long-lived mechanical item, such as a furnace. Keep in mind the usual homeowner’s chores of lawn care, snow removal, gutter cleaning, and other regular home maintenance needs.

• Upfront & closing costs. Buying a home entails numerous upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include deposit money, down payment (typically ranges from5% to over 20% of the purchase price), home appraisal, home inspection, property taxes, and first year’s homeowner’s insurance. • Loss of relocation flexibility. It is much easier to break a lease and move out of town than to arrange for the sale of a residence. Selling the home from out of town involves its own special logistical and financial problems, such as dealing with the mortgage while the home is on the market. • Financial loss potential. Homeownership builds equity over time; however, equity doesn’t equal profit. If home values in your area go down or remain stagnant during your time as a homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.

DISADVANTAGES OF RENTING

• No equity. The monthly rent you pay goes to the landlord. It represents the fee you pay for using the property. You gain no ownership in the property, no matter how long you live there. • Home improvements go to the landlord. Any structural or decorative home improvements renters make belong to the building owner and will have to stay behind when you move to a different place. Additionally, approval will be necessary for any major redecoration.

After all is said, the decision to buy or rent depends on the prospective homebuyer’s circumstances. There is no denying, though, that a home of your own is a good financial and emotional investment. An investment in a home can also mean an investment in the future of your children. There can be nothing better than leaving a home behind as a legacy for your children to enjoy. There is much to consider when you want to buy a home. Switching from renting to homeownership is highly challenging, but an exciting and amazing decision to make. Owning your first house is the first real step toward the perfect home you’ve been dreaming of. Because, at the end of the day, as we all know, there really is no place like home.

CHAPTER 2 Needs and Desires

After the decision is made to buy a home, what sort of home it is to be is the next decision point. Imagine your dream house. It fulfills both your needs and desires. It fits the need for a good roof over your head, a sturdy structure, modern fixtures and appliances, living space (e.g., bedrooms, living room) and function rooms (e.g., kitchen, bathrooms). Your needs fulfilled, you turn to your desires. A home on the beach or in the woods, a gourmet kitchen, a wood-paneled den, crystal chandeliers hanging over a banquet table in the manor- sized dining room and an Olympic-sized swimming pool with a hot tub and sauna. In your first home, you must ensure all needs are met; however, there are probably going to be some desires that you will have to let go for now due to affordability issues.

Decide which qualities are your needs and which are only desires.

• Would you like a swimming pool? Enough that a home without one is not worth looking at? • In what areas or neighbourhoods might the home be located? Where do you want to live? Where might you have to live for work commute or home price reasons? • What features would make it special and which ones matter most? • What can you afford and what is out of your budget? Budget usually constrains us most in selecting a home. While some things are necessary for any home (as mentioned, a good

roof, a working furnace, a solid frame), others will just have to stay on the list of desires for now (the sauna, or that Lakeshore address).

MAKE A LIST. CHECK IT T . CHECK IT TWICE.

You may have an existing impression of what you want from your new home. Putting that to paper and having a complete checklist can prove useful. Before starting your hunt for a new home, it is advisable to make a list of all your basic needs and desires, then rank the desires by priority, assuming that all needs must be met for a house to merit consideration in the first place. This will make the search easier. Realize that it is nearly impossible to find a home that meets all requirements at once in both needs and desires, though. Compromises will be necessary. It is a good idea to work in order from outside-the-house factors to inside-the-house. For example, location is perhaps the primary concern and both “need” factors and “desire” factors might be involved. A “need” would be “must be within 25 kilometers of work.” A desire might be, “would like Lorne Park” (a favored neighbourhood), while a need might be “on west side of city,” (because work, family, friends, and recreation activities are all located there). Location needs may include proximity to schools, frequently used recreation facilities, or mode of transportation (bus or suburban rail access). Whether an item is a need or a desire depends on circumstance. Closeness to family might be a need for a couple with young children or elderly parents to care for, or a desire if those factors are not involved. It is items like these that make a checklist helpful.

After location needs and desires are compiled, housing factors

can be considered. Needs include having all essential house structures and systems in good working order. Accepting a house that needs a new roof because the owner is willing to knock $7,000 off the listing price is not a sensible deal when it will cost $10,000 to replace the roof in two years. Needs might include a minimum number of bedrooms and bathrooms, no steps, fenced yard (for pet owners or simply for privacy), perhaps a first-floor laundry facility, and any feature the prospective buyers have decided they cannot accept a home without. Desires are features that make the home more attractive or enjoyable — an upgraded kitchen, walk-in closets, a master bedroom suite. Of course, one buyer’s need is another buyer’s desire. The point is to know your own needs and desires so you can easily assess potential properties. Buying a house is not a simple process. Much of the planning should be done well in advance of contacting a real estate agent or looking at houses. Work out the costs and decide your budget. Choose a general location. Contact lenders well ahead of home shopping so your offers are not tied up in getting financial approval. Having the image of your dream home is reality married with imagination. In fact, you may find that some aspects of the house you intend to buy are different. It’s not the same as what your dreams would have told you. Different people have different requirements. It depends on your thought processes and personality. We understand important things and potential compromises differently. Needs are basic requirements that cannot be ignored or compromised. Desires, on the other hand, can be left behind if the situation demands. You need to make a clear distinction between what your necessities are and which items you would be better off classifying as desires.

Remember, no matter how many desires you leave unfulfilled now, they can be worked on later. A pool can be added after a promotion or two. Maybe you don’t like the colour of the walls or the window frames; renovation may be a hassle, but it’s always an option for later. Paint colour is rarely a need, but having a garage if you plan to run an auto-mechanic business out of it is.

A NOTE ABOUT PETS

Consider your pets when home-shopping. Homebuyers who are pet owners have special requirements they must meet for their pets. A third (33%) of millennial-aged survey respondents (ages 18 to 36) who purchased their first home say the desire to have a better space or yard for a dog influenced their decision to purchase their first home, according to a survey conducted online by Harris Poll on behalf of SunTrust Mortgage. Dogs ranked among the top three motivators for first-time home purchasers and were cited by more millennials than marriage/ upcoming marriage (25%), or the birth/expected birth of a child (19%). It is essential that the neighbourhood in which you are going to buy a house have no restrictions on pets. Do you raise American Staffordshire Terriers? There are cities that ban this breed — they’re better known as pit bulls. Goats? Vietnamese pigs? Do you love to always have fresh eggs from your own chickens? Include your animals in location planning. Some pet owners prioritize wood or other durable flooring, not wanting to risk pet damage or odors that might be a greater risk with carpeting. A fenced backyard of appropriate size is on the needs list for many pet-owning house buyers. Consider the arrangement of rooms and the structure of the house as well to make sure it is

suitable for your pets. Traffic in the area may be another checklist item. Pet services such as veterinary, grooming, and exercising should be conveniently accessible nearby.

LOCATION, LOCATION, LOCATION!

You must make sure to be in a neighbourhood that offers the closest possible match to the kind of lifestyle that you want. Trulia recently conducted a survey with Harris Interactive, and the real-estate site found 84% of respondents said the neighbourhood would be equally important or even more important than the house itself if they were searching for a new home. Location is so important that people are willing to give up “must- have” features to buy into their desired neighbourhood — 72% would forget about a pool, 55% would lose a finished basement, and 33% would accept less square footage. What matters is living in a safe place with good schools. According to Trulia, 69% of buyers would drive through the neighborhood during different times of day to determine if the neighborhood was the right fit. You can’t go to buy a home without choosing a location where you would like to live. Probably the most significant decision when buying a home is where it is. Location influences nearly every part of your everyday life. Your home does not exist in a bubble. It’s part of a bigger community. It is important to find a neighbourhood or area that suits your needs. Do you want the peace of a secluded woods or the energy of a bustling city center?

Do research before starting your search. Drive through the area and see if all the stores, activities, and features you want are there. Eat at local restaurants and walk through a nearby park. As price is mainly based on location and condition of the property, when someone starts looking for their house, it is important to consider the location and how far it is from schools, shopping areas, and other facilities. Home means comfort, and comfort can’t come if the location is not suitable.

CHAPTER 3 Getting That First Mortgage

Venturing into the housing market can be intimidating for anyone. Since the housing market crashed in 2007, the road to recovery has been rather uneven. This includes very tight lending, new requirements, and buyers held back by increasingly strict lending standards. There are signs of improvement in the housing market, though. Banks are relaxing previously strict minimum requirements, and lenders are offering mortgages with down payments at lower rates. This may very well be a good time to consider jumping into the market. With the housing market heating up and consumers ready to buy a home, it is time to begin preparing for the road that lies ahead of you.

THE CRITICAL IMPORTANCE OF A GOOD CREDIT SCORE

Your credit health is the most important factor in deciding what interest rate you will pay on your mortgage, and the difference could be substantial. Your credit rating’s impact is so significant that the difference could be in the thousands of dollars, just from a few points on your credit score. Consider this example. Let us take $650,000 as the price of a home. Two buyers buy at that price and both take a 25-year amortization, 5-year mortgage term. They both put 20% down. One buyer has a low credit score of 620, while the other has a higher score of 760. The one with the poor credit score will end up paying an interest rate as much as 3.5% to 5% higher. This difference could translate into

hundreds of dollars per month in mortgage interest payments and a difference of more than $439,657.20 over a mortgage’s lifetime. The factors used to calculate an individual’s credit score are credit payment history, current debts, length of credit history, credit type mix, and frequency of applications for new credit. The different scoring systems are based on different criteria, weighted differently, so the two major credit bureaus in Canada (TransUnion Canada and Equifax Canada) may produce different scores for an individual, even though the scores are based on the same credit report information. Your current credit score is a huge issue in determining if now is a good time to house shop. Having a good credit score before you take on a mortgage is an important factor.

A SHORT GUIDE TO CREDIT HEAL IT HEALTH

We are increasingly dependent on credit; therefore, it is necessary that you have a good understanding of personal credit reports and your credit score before beginning the process of buying a home. When you apply for credit (i.e., a mortgage, credit card, or utility service), your credit score is checked. A credit score in the 500s is poor, while one in the 800s is excellent. Depending on your credit score, lenders will determine what risk you pose. Increased credit risk as shown by a low credit score means that a risk factor is added to the price at which money is lent. If you have a poorer credit score, lenders will lend you money at a higher interest rate than one paid by someone with a better credit score. Below a certain score, lenders will not even deal with you. Here is a short guide to help ensure that your credit is in good shape before you jump into the mortgage market. • Monitor and analyze your credit history. With your credit 18

score being such a crucial aspect of the final approval on a mortgage, it is important to have a current idea of how your score is going to affect you. Keep a tab on your score well in advance. This will help you to have an accurate estimate of the rate that you can expect. If your credit score is good, it will help you get approval. Take this opportunity to find out areas where your credit history could use improvement, and take steps to make sure those improvements happen. • Report errors and inconsistencies. Do not let errors on your report make you pay more than you should. Make sure you pull and carefully check the three credit bureau reports, and be sure to dispute any errors that would affect your score such as wrong credit limits or incorrect accounts. • Pay off outstanding accounts. Lenders and underwriters of your mortgage will want some certainty that you are a trustworthy buyer who will be able to make payments on time. This means that having any delinquent accounts or outstanding discrepancies on your credit report may hurt your chances of approval at the best interest rates. Before applying, try to clear any such accounts that are hurting your score. • Decrease the percentage of your income that goes into paying debts (your debt-to-income ratio). Keeping your debt at a manageable level is a requirement of good financial health. Your debt-to-income ratio compares your monthly debt expenses to your monthly gross income. To calculate your ratio, add up the payments you make toward debt during a month. That includes your monthly credit card payments, car loans, other debts (such as payday loans or investment loans) and housing expenses — either rent or the costs for your mortgage principal, plus interest, property

taxes and insurance (PITI — Principal, Interest, Tax, and Insurance). Next, divide your monthly debt payments by your monthly gross income — your income before taxes are deducted — to get your ratio. (Your ratio is often multiplied by 100 to show it as a percentage.) For example, if you pay $400 on credit cards, $600 on car loans and $3,000 in rent, your total monthly debt commitment is $4,000. If you make $150,000 a year, your monthly gross income is $150,000 divided by 12 months, or $12,500. Your debt-to-income ratio is $4,000 divided by $12,500, which works out to 0.32, or 32 percent. While the preferred maximum varies from lender to lender, it’s often around 36 percent. • Beware of applying for credit. You want your credit score as high as possible when applying for a mortgage. Thus, you should try to avoid getting more credit, especially when your underwriter is deciding on your mortgage. Every credit application you fill out during this time could lead to an inquiry that might significantly decrease your score. • Keep your credit clean before purchasing a home. When it comes to your credit and purchasing a home, you must be extremely careful how you handle your money. One wrong move and you can wave goodbye to your new home. In the case of purchasing a new home through an application for a mortgage, it’s best to wait before taking out any credit cards or applying for car loans. If it’s impossible to wait, make sure you speak to your mortgage officer or mortgage broker for some advice. You do not want to risk losing your mortgage.

TIPS TO BE PREPARED

When it comes to taking out a mortgage with a mortgage broker, you are going to need to be prepared. This means you will need 20

to produce many documents, beginning with tax returns from at least two years before. Lenders will also want to see monthly bank statements, as well as proof of your income and all debts you may have. It’s also a good idea to have sources for any big ongoing deposits you may have. If you have family making a down payment for you, it is important to have a written “gift letter” to document such information for your lender. Otherwise, the amount will be considered a mortgage and included in your financial analysis. You will need money for the down payment, closing costs, at least a year’s worth of taxes, and insurance payments. It is also recommended that you have extra cash because mortgage lenders will want to ensure that you have an adequate reserve. This is in case something in the home breaks and needs to be replaced, or if you lose your job and need money to make payments while you look for new employment. Multiple financial experts have agreed the general rule of thumb for a down payment is around 20%, but you are able to do it with as little as 5%. Keep in mind that if you are paying less on the down payment, you will be paying more monthly. This also includes the private mortgage insurance you will need to pay, which is known as the mortgage insurance premium. The mortgage insurance premium only applies, however, if your down payment is less than 20%. One thing you should keep in mind is that improving your credit score will not happen overnight. It could take quite some time. It is essential that you begin keeping your credit score in check the moment you start thinking of buying your home. By keeping your credit score at a good level, you will not have to worry about paying extra interest on your house.

CHAPTER 4 Common First-Time Mistakes

If you do decide that it makes sense for you to consider the investment of owning your own house instead of renting — congratulations! Home-hunting is exciting, exhausting, and anxiety-provoking, all with good reason. Unfortunately, many people make mistakes that prevent them from reaching their goal. Learn from these tips to avoid making costly errors that could put a hold on that “sold” sign.

NOT KNOWING YOUR BUDGET

Not knowing what you can afford is the wrong way to go into home buying. Even if you can get a mortgage on a place you really should not afford, you will be “house poor” and/or live in great debt for a long time to come. We learned from the subprime mortgage fiasco that what the bank says you can afford and what you know you can afford or are comfortable with paying are not necessarily the same. You might be able to eke out the monthly payment on that big old Victorian, but can you afford to furnish it? Perhaps the cute little Tudor is more appropriate. Ensure you have a complete and accurate budget. List all your monthly expenses — excluding rent, but including vehicle costs, student mortgage payments, credit card payments, groceries, health insurance, retirement savings, general savings, recreation (e.g., the gym), fees, and so on. Be comprehensive and do not overlook major expenses that only occur once a year, like insurance premiums paid annually or annual vacations, or minor ones that come up more frequently and quietly pile up in the background.

Subtract this total from your take-home pay and you’ll know how much you can really spend on your new home each month. When calculating this figure use a mortgage calculator to research current interest rates. This will give you an estimate of what your mortgage payments will be. You may even realize that you genuinely cannot afford the home that you desire and that you need to work on reducing your monthly expenses or increasing your income before you even start looking.

NOT GETTING A PRE-APPROVED MORTGAGE

Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it. If you have already started talking to sellers before having a hard talk with mortgage lenders, you are making a mistake. It should come as no surprise, but not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise. Your assessment of what you think you can afford and the amount the bank is willing to lend you may not agree, especially if you have poor credit or unstable income. Ensure pre-approval for a mortgage before placing an offer. If you don’t, you’ll be wasting the seller’s time, the agent’s time, and your own time if you enter into a contract and then discover the bank won’t lend you what you need, or that it’s only willing to give you a mortgage that you can’t or won’t accept.

DISREGARDING HIDDEN COSTS

This is another common mistake that many first-time homebuyers make. If you neglect to prepare for hidden fees, you might be in for a surprise. Closing costs are a good example of hidden fees, as they usually include several fees that cover

final housekeeping matters. Once you’re a homeowner, you’ll have additional expenses on top of your monthly payment. You’ll be responsible for paying property taxes, insuring your home against disasters, and making whatever repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace). If you’re interested in purchasing a condo, you may have to pay maintenance costs monthly regardless of whether anything needs fixing because you’ll be part of a Condominium Corporation, which collects a couple hundred dollars a month from the owners of each unit in the building in the form of condominium fees. Before signing the homebuyer’s agreement, it would be wise on your part to ferret out any and all hidden fees and incorporate them into your budget.

NOT KNOWING YOUR CREDIT SCORE

If you apply for a mortgage without checking your credit score, you could end up paying a lot more than you expected. It is best to perform a credit check beforehand. Take special note of the information regarding the importance of good credit in applying for a mortgage and take all necessary steps to repair credit problems prior to home shopping.

DISREGARDING LOCAL HOUSING MARKE G MARKET TRENDS T TRENDS

Like other financial markets, the housing market fluctuates over time. Sometimes it favors buyers, and sometimes it favors sellers. This can change dramatically over a three- to six-month period. A number of factors affect housing marketing trends, including the ratio between supply and demand, interest rates, and the overall condition of the economy.

It’s important that you consider how the housing market changes

in your ideal location, as home prices vary from one location to another. Stay alert to comparable sales (comps) in the area. If they sell for below listing price, it is a buyers’ market. If they sell above listing price, it is a seller’s market. This information can be important when making offers, allowing you to calibrate your proposal to better suit the market and — if you’re lucky — your budget.

NOT BEING REPRESENTED BY A B ENTED BY A BUYER'S AGENT

You can browse without an agent, but once you are considering seriously looking at a house, engage a real estate agent. Do not rely on the seller’s agent to represent you. In fact, it would be fair to say you should never walk into an open house without having an agent. The listing agent is the seller’s representative, is paid a commission on the sale price, and has the seller’s interests in mind. A buyer’s agent, on the other hand, is paid from a commission that is split with the seller’s agent. All-in-all, it’s pointlessly risky to negotiate conditions and sale price without proper professional representation on your side.

NOT CONDUCTING A PROFESSIONAL HOME INSPECTION

It can be a costly mistake to rely on the seller to inform you about house problems. Prior to closing on the sale, you need to know the property’s specific condition. Any sales agreement must be conditional on the satisfactory results of a complete and comprehensive home inspection by a reputable and qualified home inspector. This will disclose structural and systems issues or weaknesses that can run the gamut from plumbing, gas, and electrical problems to full-blown structural integrity problems in roofing, walls, or foundation.

COMPROMISING ON YOUR NEEDS UR NEEDS

While compromises in meeting your dream-home desires are necessary in a first-home purchase, do not compromise on your needs. You can do without the living room fireplace or swimming pool; however, don’t accept a two-bedroom home when you are planning to have children and will need three bedrooms. On the other hand, use your vision. Even if you hate the wall colours, but cannot afford to renovate immediately, it might be worth it to live with them temporarily in exchange for a house you can afford. If the home meets your needs in the location and size, don’t let lesser physical imperfections overpower your perspective.

RELYING ON ONLINE S NLINE SERVICES ONLY

Now that many real estate transaction services are obtainable at the click of the mouse, many people have become too dependent on them. While it is true that mortgages can be obtained online and houses can be bought as well, failure to establish personal touch with lenders or home sellers could present costly misunderstandings in future or put you at a bargaining disadvantage. It might feel more convenient and less stressful to go through as much of the process as possible online, but you may well find you’ve simply saved up far more stress and inconvenience for later. In the end, it’s better to simply take the plunge at the outset and handle things in person when you can. Avoiding these mistakes can help you make the right choices when it comes to finding a home you and your family can take pride in. Keep in mind, also, that if and when the time comes, the resale value will be a great help to avoid problems moving on in the future.

CHAPTER 5 Searching for the Rig or the Right Home ht Home

Buying a home is an exciting event, but the process of finding the right one can be daunting. It’s a major investment. It is an emotional time, full of lasting lifestyle decisions to make. It is not like buying a pair of shoes from the department store that are a bit snug, because you can’t just return the house if you’re not satisfied. Once you buy, you’re in for the long haul. To avoid costly mistakes that could haunt you for years, you need to make sure that you do your homework properly when house- hunting.

VIEWING A HOME

For most people, the prospect of going to view homes they like is a thrilling experience. It is tempting to think that that is the first step to buying a home, but it’s not. Assuming you have your down payment, mortgage pre-approval, and other financial issues handled, the first thing you need to do before viewing any home is to determine what you’re looking for. • What are your criteria? • Do you need a set number of bedrooms and bathrooms? • Do you want a yard? • Do you want property only in particular neighbourhoods? • How much are you willing or able to spend? Answering these questions as early as possible will save you time 29

and effort spent running around to view homes that do not suit you. Once you’ve decided upon your criteria, call your real estate agent. Let him or her know what you’re looking for and what your price range is. He or she will get to work on your behalf, short-listing the properties that meet your criteria so you can start your viewing from there. Then you can finally get to the fun part, finding that perfect home you’ve been dreaming of!

SCHEDULE ADEQUATE TIME

When going to view homes, make sure you’ve got plenty of time to really view the home from a critical perspective. Schedule enough time to do a proper inspection. Look into all closets and crawl spaces. It is possible you will be living there for years to come, so five minutes strolling around is not going to cut it. Two hours to view your potential house is an appropriate calendar entry. Research suggests that when buyers spend a longer time viewing a home, they are more likely to end up paying less than the initial asking price.

BE THOROUGH

Part and parcel with scheduling adequate time to view the home is using that time well. Be thorough when checking it out. Open drawers, cabinets, and cupboards — the dark back corners of cupboards, outside easy reach or cleaning, are a perfect place to find the telltale signs of bugs or other pests. Look behind furniture, and even under it to find stains or signs of wear not readily evident. Lift up rugs if necessary. While this may seem rude, it is not. You are about to make a substantial investment and you need to know exactly what you are getting.

Sellers have no obligation to inform you of or show you every single defect in the home, so you need to find them yourself. An artfully positioned chair could be hiding something, so feel free to look where you need to. Of course, if you’ve dismissed the home from the start, do only a minimal walk-through or don’t bother with the inspection at all. But if the property has potential and is something you like, open every door, look in every closet, and shine a light in every shadow.

WHAT COMES WITH THE P MES WITH THE PROPERTY?

Make sure you know exactly what, aside from the house itself, you’re paying for. Confirm what does or does not come with the home. For example, are the stands or fixtures for the exclusive use of that home, or will the owners be removing them on the way out? Are appliances such as refrigerator and washer/dryer included in the sale? Make sure to get confirmation in writing if you decide that you would like to buy the property — there’s nothing to sour moving into a new home like finding out you need to buy a host of pricey accoutrements to replace the ones you thought were included with the house.

DON'T BE FOOLED BY S LED BY STAGING

Sellers use clever tricks to make a home more appealing. They can strategically light a room to draw attention away from a problem or apply fresh coats of paint to cover water damage or a mold issue. While you are viewing the house, look beyond the immediate aesthetics of the interior décor. Focus your attention on what you will get when the furniture and interior décor are stripped away.

KEEP EMOTIONS AT BAY

When viewing a home initially, try not to get attached immediately. Keep emotions out of considerations and only consider the potential property as a building you need to inspect and assess for others. Rapid emotional attachment may cloud your decision-making or allow you to overlook failings in the house you might see differently without an emotional lens. If you get attached from the get-go, you might make an emotional decision and overlook major problems. Without question, an emotional attachment will affect your ability to calmly and dispassionately negotiate.

VIEW MULTIPLE TIMES LE TIMES

If you have found a likely prospect in which you have a serious interest, view it multiple times. You are more likely to identify potential problems if you view it several times at different times of the day. You will also glean knowledge of the neighbourhood at various times. Is a street that is not busy in the late morning a commuter route in early morning and mid-afternoon? This way, you will know what traffic is like in the area and the noise levels that occur at different times. Getting a good sense for the environment can be just as valuable a benefit of viewing a prospective home as what you find inside the house itself.

CONSIDER THE OVERALL CONTEXT

When viewing, don’t just consider a property on its own, view it in the context of its location. What is the area like? Is the property adjacent to a train track or noisy intersection? Is there a pub or bar close by that gets noisy at night? How close are you to the things you might need, such as schools, public transit, a grocery store, or hospital? These are important questions to consider when viewing properties, as they can add or subtract from the overall enjoyment of your home.

LET YOUR AGENT DO THE J O THE JOB

Do not go viewing on your own. There is a security factor in traveling to unoccupied houses alone. Additionally, there are other ways this makes you vulnerable. A seller’s agent might think you are unrepresented and attempt to take advantage of you. Let your agent do their job. If you come across a property that interests you, but your agent has not told you about it, it may not meet all your criteria. If you think you want to view it anyway, contact your real estate agent with the address and phone number. Your agent can arrange a proper viewing for you, with the owners absent and themselves on hand to help keep an eye out for possible flaws, as well as provide an emotionally- uninvolved perspective to balance out the rosy tint of excitement.

THE CONDITION OF THE PROPERTY

When assessing a home for potential purchase, there are important items to be on the lookout for, the primary one being the condition of the property. • Is the home structurally sound? Walk around the interior of the home checking the walls and ceilings for cracks. Hairline cracks are to be expected in some places, but larger cracks or an unusual amount of smaller ones may warn of problems to come. Check the exterior for cracks as well. Points at which extensions join are places to play close attention to, as cracks often occur there. Also look for loose or broken tiles or shingles on the roof or broken guttering, evidence of damage to the drywall, and weaknesses in the floors. If you do find something wrong, it is a perfectly legitimate question to ask how long it has

been like that and it will be fixed. If you see major cracks or bowing walls, have a structural engineer assess the situation. • Look (and smell) closely for evidence of mold. Mold and mold damage is a major problem that will cost you a lot to clean and repair. Don’t just look for it — use your nose as well. Mold frequently gives off a musty smell, even when there are no visible signs. Inspect all crawl spaces, basement areas, and walls. Plaster that is flaking, watermarks on walls or ceilings, or even a fresh coat of paint in part of a room could be indications of mold. Do not forget to check the ceiling and around the skirting boards properly for evidence of leaks or water damage. • Ensure heating, air-conditioning, and electricity are in good working order. Other aspects to consider when looking at the general condition of the property are the heating and air conditioning systems. Have an expert assess that they are the appropriate models and capacity, and that they are working properly. Check the fuse box. It should not be old or outdated, must be easily accessible, and in good working condition. Ensure wiring was installed properly — you don’t want to spend a fortune rewiring the home to bring it up to a standard. Also be sure to consider if there are enough power outlets and if they are in good condition. • Inspect basements and attics. Check the attic for water leakage issues or signs of pests. Look for water damage or leaks that may have affected the insulation, walls, and ceiling of the attic. Make sure that the insulation is adequate for where the property is located, and that nothing appears to be nesting in it. In the basement, look

for evidence of moisture problems. Is there water leaking onto the floor or water stains around the foundation? There should be no cracks in the basement walls and any wood such as exposed beams or wooden stairs should be in good condition with no rot. • Look at pipes, turn on taps. Check that the plumbing is up-to-date. Run taps to ensure they work properly and the water pressure is strong enough. Exposed pipes in unheated areas should be insulated, as frozen pipes will eventually cause water damage. It is particularly important from a health perspective to ascertain that the pipes are not made of or lined with lead. If they are, you will have to replace them, no matter the expense. Also, check the age and condition of the hot water heater — important both for your convenience and your safety. • Is the exterior of the home in good shape and well- maintained? Check for evidence of water around the foundation, which may indicate drainage issues. The ground should slope away from the foundation, not toward it. If there is a porch, it should have a foundation as well and not simply sit on soil. Check that driveways and walkways leading up to the house do not have cracks and are not crumbling. Check that the siding of the home is in good repair. Look at the landscaping on the property. It should not be unkempt and unsightly, as that can indicate a lack of care. The sprinkler system, if there is one, should be in proper working condition. If there is a deck, ensure there is no decay or damage from termite or beetles.

PROPERTY HISTORY

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