Buying Your Home - What You Can Afford
How much does my real estate agent need to know?
Real estate agents would say that the more you tell them, the better they can negotiate on your behalf.
Agents working for buyers have three possible choices: They can represent the buyer or seller exclusively, called single agency, or represent both the buyer and seller in a dual-agency situation. In BC we are required to disclose all possible agency relationships before we enter into a residential real estate transaction.
Here is a summary of the three basic types:
* In a traditional relationship, real estate agents have a fiduciary relationship to the seller. Be aware that the seller pays the commission of both agents, not just the one who lists and shows the property, but also to the agent who brings the buyer to the table.
* Dual agency exists if one agent represents the buyer and seller in a transaction. A potential conflict of interest is created therefore a dual agent shall not disclose to the buyer that the seller will accept less than the list price, or disclose to the seller that the buyer will pay more than the offer price, without express written permission.
* A buyer also can hire his or her own agent who will represent the buyer's interests
exclusively. A buyer can trust them with financial
information, knowing it will not be transmitted to the other broker and ultimately to the seller.
How much will I spend on maintenance expenses?
Experts generally agree that you can plan on annually spend 1 percent of the purchase price of your house on repairing gutters, caulking windows, sealing your driveway and the myriad other maintenance chores that come with the privilege of homeownership. Newer homes will cost less to maintain than older homes. It also depends on how well the house has been maintained over the years.
What can I afford?
Know what you can afford is the first rule of home buying, and that depends on how much income and how much debt you have. It pays to contact a lender or mortgage broker before you start searching for a home.
The price you can afford to pay for a home will depend on six factors:
1. gross income
2. the amount of cash you have available for the down payment, closing costs and cash reserves required by the lender
3. your outstanding debts
4. your credit history
5. the type of mortgage you select
6. current interest rates
When is the best time to buy?
Here are some frequently cited reasons for buying a house:
* You need a tax break. The mortgage interest deduction can make home ownership very appealing.
* You are not counting on price appreciation in the short term.
* You can afford the monthly payments.
* You plan to stay in the house long enough for the appreciation to cover your transaction costs. The costs of buying and selling a home include real estate commissions, lender fees and closing costs that can add to the sales price.
* You prefer to be an owner rather than a renter.
* You can handle the maintenance expenses and headaches.
* You are not greatly concerned by dips in home values.
Where do I get information on housing market stats?
A real estate agent is a good source for finding out the status of the local housing market.