Fear of Buying a Home
Buying a home can be a scary proposition for most people…
Especially first-time buyers. No wonder! It’s likely it’s the most money you’re going to spend on anything in your life, there are a multitude of unfamiliar terms, legal documents, etc. It seems so permanent!
It’s only natural that you feel this way considering you’re going to be paying it off for the rest of your life. We’ve all heard that the best way to overcome fear is to confront it head on. By looking at them one at a time, you might find that buying a home is just another stage in your life. It may even turn out to be fun!
Fear #1: I’m Worried about the Economy
What if you buy a home and then the economy collapses? Media and critics continually forecast that the economy is going to collapse at some point, but that has not happened yet — no matter how bad times have been, no matter how the stock market rumbles, and no matter how high unemployment rates get.
Also, homes are not subject to the high sensitivity that short-term investments such as stocks are. They do react to the overall economic climate — sales prices rise and fall — but not as quickly or radically as stocks.
By all means, keep an eye on the economy; bad times often present excellent opportunities to buy. But don’t let periodic downturns alarm you into thinking it’s all going to tumble down, taking you and your home with it. If you buy wisely your investment will be safe from the natural ebbs and flows of the economy. Besides, you need somewhere to stay. Why pay off a landlord’s mortgage instead of your own?
Fear #2: I’m Afraid of Being Denied a Loan
I was working with a young couple who really wanted to get out of their rental situation and into a new home. I referred them to a mortgage broker who specialized in helping the young, self employed first-time homebuyers, who had poor credit. They weren’t eligible for any normal big lenders, but the mortgage broker helped them get their finances in order so that they would look better in the eyes of lenders. For six months they followed his advice and got on track to improve their credit rating.
In the end, they were able to buy a home with an alternative lender. No matter how heartbreaking your situation may appear, and how painful it may be to face, know that with guidance from a good mortgage broker, you may be able to turn your situation around.
Lending institutions are in the business of lending money, and unless the country is sailing through some very troubled economic waters, making mortgage money available is their job.
If you have had credit problems in the past and you’re worried that they will work against you in trying to buy a home, you may well be wrong. Even if you have filed for bankruptcy, homeownership can still be within your grasp. Of course, it is wise not to go house hunting until you are back on solid financial footing.
With a stable financial situation, no matter what your past, homeownership is still within your reach.
Fear #3: I Don’t Have Enough Money for a Down Payment
Traditionally, you have always heard the recommendation of putting 20 percent down. But today, this is practically impossible for many first-time homebuyers. You can put as little as 5% down, but some opt not to do this because the less money you put down the higher your monthly payments will be. And if you are able to put 20 percent down, you immediately have equity in your home and don’t have to pay mortgage insurance. (CMHC, Genworth)
The key is having great credit and doing your research and having a reputable mortgage broker that can help present your financial portfolio in the best possible light to an appropriate lender. Always be upfront with your broker and real-estate agent about your financial situation.
Fear #4: I’m Confused About What to Buy
The diversity and the wide range of prices are bringing home owning opportunities to many more Canadians. Several factors go into selecting the right home for you. These factors include the price you can afford, the size of your family, your commuting time to work, and what the realty market around you has to offer.
Here are a few important points to remember:
- Go with your instincts. If you want a loft and it fits in with other areas of your life, then buy a loft.
- Keep an open mind. Consider all home styles and neighbourhoods, even those that may not initially seem ideal. You may find that one of them is just right for your lifestyle and interests.
- Think about what type of neighbourhood you’d like to live in. You say you would not be caught dead living in the city? Think the suburbs are too sedate for you? You may be surprised to find stable neighbourhoods with vibrant communities in unexpected places.
- Visit a variety of places for sale in your area, such as condominiums and single-family homes, over even homes with a basement apartment to help pay down your mortgage. Take in all that your area real-estate market has to offer. You will learn a lot about neighbourhoods and house styles, and the confusion will eventually disappear.
- Consider which homes you feel drawn to. After conducting various investigations, you should find yourself drifting back to one or two favourites.
Fear #5: I Don’t Know Anything About Home Maintenance and Repair
There are three general types of homeowners: those who do all the work around a house themselves, those who do some and farm out the rest, and those who call in repair people for everything. You may think you belong to the last group, but when you buy, you will probably surprise yourself with your abilities — and your interest. When you are in your own home, puttering around can be enjoyable. After all, you are putting time and money into your own place.
Generally, buyers find they grow into becoming responsible homeowners in the same way one grows into other roles requiring responsible action and decision-making. You do not have to learn everything at once, and you will be pleasantly surprised at how much help is out there — including help from relatives and friends, myself, your new neighbours, the workers at the lumberyard, and the salespeople at the home centre. They will gladly pass along tips on where to find craftspeople and how to manage all the other complexities you will run into in your home.
And, of course, there are websites and dozens of books on the market about every aspect of home repair.
Just learn enough about your home to recognize a problem when it occurs and to know whether you can fix it yourself or must call in expert help.
You don’t need to know the intricacies of what makes a heating or plumbing system work, you only need to know when a job requires outside help.
If you are still concerned about maintenance, consider buying a condo. Or how about sharing a two-family house with a relative or friend so that you can share concerns about a leaky roof?
Fear #6: I’m Afraid I’ll Discover Too Late That I Can’t Afford the Home I Buy
That is not likely to happen. Unlike a landlord, who generally does not care how much of your income you have to spend to pay the rent, a mortgage lender has a vested interest in ensuring you can make your monthly payments; after all, it’s their money. They will ensure that the house you buy stays below a certain percentage of your income so you don’t get in over your head financially.
In addition, reputable real-estate agents such as myself will not show you homes out of your price range. Before you see even one home, your lender and real estate agent will have determined the price range you can afford. So as you search, there are two people keeping you from getting carried away by a home you cannot afford.
Finally, if you have the home inspected by a professional before you buy it, you can avoid unexpected expenses. An inspector should give you a clear idea of what is in good shape and what needs replacing immediately. Then, you can negotiate repairs with the seller to get it fixed before you move in or bargain down a price reduction to help cover the costs.
In sum, the home buying process includes a number of checks to help ensure the house you purchase is one you will be able to afford.
Give me a call or send an email if you’re just starting the process and I’d be more than glad to chat with you.
Bosley Real Estate Ltd.