What to Think About Before Buying Your First Condo
Tuesday Oct 20th, 2020
You might think that you have reached a point in your life where you are ready to settle down and be a home owner, but have you done your homework? Whether you are moving out of your parents’ house or finally purchasing a new condo with your spouse after years of paying expensive rents, investing in real estate is a crucial step. However, this significant long-term commitment requires the right time and a strong financial standing. To avoid falling in any pitfalls, here are a few things to consider before purchasing your first condo:
Save Up for a Down payment
Even if you qualify for a sizable loan for the mortgage, remember that paying at least a 20% down payment would help you down the road. Combined with the subsequent mortgages, it would help you fulfill the cost of the condo, avoid private mortgage insurance and give you an immediate equity in the house in case the value of the property falls. The sooner you start saving, the better your prospects would be.
Obtain The Right Mortgage
Have you thought about obtaining a mortgage? Most house owners spend much more time thinking about buying a condo than on finding the right mortgage. With various types of mortgages available in the market, it is wise to talk around with friends, family and experts. Independent financial advisers and mortgage brokers can also compare different mortgage deals in the market for you. Shop around as much as you can since interest rates vary from firm to firm. Saving just half a percentage point on an average-priced home could lead to tens of thousands of dollars in savings over the years.
Gauge Your Finances
You need to honestly review your financial situation before jumping in to the idea. You may have saved enough cash for a down payment, but have you considered credit? It’s getting harder by the day to obtain a mortgage these days, since the lenders are closely scrutinizing each and every document of your debts, incomes, tax returns, assets and liabilities to determine eligibility, so make sure that you don’t exceed the maximum debt to income ratio. The most competitive interest rates are only nailed by buyers with credit scores above 750. To ensure that you are not being unjustly penalized for any paid, old or settled debts, pull out all your credit reports and documents, such as check stubs, letter of employment, bank statements, tax returns and transcripts and copies of rent checks to previous landlords, and improve your chances.
Factor in the Hidden Costs
Have you factored in all the hidden costs besides the mortgage and down payment? Most first time house buyers make the mistake of not taking in to consideration all the ongoing expenses of owning a condo, such as the realtor fees, appraisal fees, buyer’s brokers fees, loan application fees, property taxes, utilities, home owner’s insurance, maintenance and closing fees. Add up all the expenses before deciding how to manage your finances and prepare for these expenditures instead of draining all your cash in the condo.
Set Your Priorities Straight
Have you thought about the specifics of the property that you need? While each of us has a dream house, it may not work very well with our limited finances. Get down to the nitty gritty details and think about the absolute basics before the aesthetics. Are you ok with a resale condo or are you attracted by new constructions? How many bathrooms and bedrooms do you need? Do you want the free hold or the lease hold? How big do you want the rooms to be? Do the windows need to be double glazed? Do you require off-street parking? If you are a pet owner, does the condo building allow pets? Try to strike a balance between your needs and your wishes and know where you are willing to compromise.
Have you thought about the most practical location for your condo? Consider how critical is the location of your condo to a particular school, mall, hospitals, and access to public transport, easy commute to your job and proximity to a particular location that you frequently visit. Try to analyze the crime rates in regions and local information on properties and ask around for amenities available for you and your family.
Type of Neighborhood
Have you considered the type of neighborhood you are willing to reside in? Rude neighbors, noise pollution and lack of security in the neighborhood can really affect your lifestyle. It is a good idea to survey the neighborhood at different times of the day to gauze the style of living. You can also talk to potential neighbors to get an insider’s view of the Toronto condos that your realtor won’t tell you about! In addition, take along an expert to investigate the condo so that you won’t be weighed down with hidden repairs later!