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Happy New Year, Happy House Hunting
Happy New Year could mean Happy House Hunting
With 2011 firmly planted in the rear view it is time to resolute for 2012. I am not known for making resolutions, for some reason I have just never bought into the thought of setting some “out there” goal just because the calendar changed. I have always said that goals and resolutions should be set regularly and evolve as you do. However, when 2011 came a long I decided to stop taking myself so seriously and just have some fun with the whole New Year resolution thing. I decided to make a resolution that would last the entire year, but no longer if I didn’t want it to. It wasn’t about losing weight, spending more family time, getting wealthy or any of the “normal” things we hear about, it was just some fun little thing…….. and I can honestly say I made it, I did it, yeah for me!
In preparation for my 2012 resolution I started to ask a few of my friends and acquaintances what they were aiming for. I got a lot of the same answers you would expect, but then I heard one resolution that really struck home for me. I heard, “I will stop paying rent”. After I clarified this meant they were going to purchase a home and not just leave their landlord high and dry without rent cheques I said Hallelujah.
Ask most and they will tell you Location, Location, Location. Somewhat true I suppose. What it means to me is don’t buy a home in a bad location. Ask me and I will tell you Knowledge, Timing, and more Knowledge. If your goal for 2012 is to become a home-owner you must consider these rules:
1) Don’t listen to your parents. Now before I get into trouble with all the moms out there let me clarify my position here. I love the advice I get from my parents, their wisdom is irreplaceable and it would be foolish to dismiss that wisdom because I told you to. The reason to not listen to your parents is because things have significantly changed since they purchased their first home. Government imposed guidelines have changed, lending policies change monthly if not daily and mortgage product options have exploded in the past 5-10 years. So by all means take their advice and help, but when it comes to specific details of the mortgage or the home buying process make sure you are armed with knowledge of the current situation you are buying in.
2) If home prices drop and interest rates increase it may cost you more than buying today. Over-all cost of borrowing is much more important to you than purchase price. For example: A $250 000 home may drop in price by 5%, down to $237 500. Obviously if this happens you have automatically saved $12 500. If the interest rate of your mortgage is the same on the day your purchase goes through as it was when the home was priced higher then obviously you have been rewarded by waiting for a price drop. This is perfect timing, and almost impossible to control or predict! But what if the interest rate was ½ % higher? Your $12 500 savings is actually only $8523.95. What if the rates increase by 1%? Your savings now is only $2904.21. Factor in the rent you were paying each month while you waited for this home price to drop and you can easily see you should not have waited.
3) Work with only those professionals who have walked a mile in your shoes. In my opinion you should not purchase a home from a realtor who still rents, you should not take financial planning advice from someone who has never invested themselves and you should not get your mortgage from someone who has never had a mortgage. Now by no means am I saying these people are not professionals, they may very well be just that. But there is no way for them to understand the emotions of the situation. In not having experienced that same emotion your transaction could be treated as just that, a transaction.
4) Before you begin the home shopping process make a list of the things you must have in your new home. Narrow the list to 3-5 musts, you know, the things that would kill the deal if the home does not have them. Then add to it the list of other wants. From this list of wants set your expectations to achieve about 70-80% of the list. In setting realistic goals your home buying process will be much more enjoyable.
5) Understand the unique mortgage programs available to you. There is more to your mortgage just looking for the best interest rate. What happens to you when your first mortgage comes due, renewal rates are significantly higher and your payment jumps dramatically? My hedge against inflation strategy is guaranteed to protect you against that. Or how about working with a Mortgage Planner who has designed a program where you get paid cash at closing. How would an extra $2000 in your pocket sound? Use my bundled service program and you could receive just that. What about the idea of planning to make your home mortgage a future tax deduction? The Bright Futures program we run will do just that. Being invested in your overall financial wellness is the number one goal I have for you, that is why our office spends countless hours designing unique programs that allow you to get from point A to point B much sooner.
Happy New Year!
Cory McLean, President
Axis Mortgage Inc.
N.A. = Not available. Rates subject to change without notice. ** Note: Many lenders offer larger discounts on some product, based on the dollar value of the mortgage, the closing date, and other factors. You may be eligible for better rates than shown above. Please contact your Axis Mortgage Professional for more information.
