Mortgages: The Basics

Unless you have bought a home before, you may need some tips and suggestions from experts in the industry. This section is designed to give you some very important ideas in the negotiation process, but it is not meant to override the advice or suggestions from a good real estate agent or real estate lawyer.

Pre-Approved Mortgage

It is very important to get a pre-approved mortgage with a locked in interest rate. This will allow you to know exactly what you are looking for so as to not waste your time, but it also makes it possible to know in advance what documentation requirements your lender will likely need so that you can get them to your lender well in advance of you buying a home.

Should I use a Real Estate Agent or Not?

Deciding to hire a real estate agent or not to work for you is often a difficult decision. Buyers often think that if they buy a home from someone privately they are getting a better deal because there are no real estate commissions. This could not be further from the truth. Think of the logic, selling a home requires a lot of time and stress in marketing, and then showing to numerous people. Finally the negotiation phase can be long and drawn out. In addition to that by selling a home without the benefit of the multiple listing service a seller is sacrificing exposure to many buyers. They would not do all of this if they were going to net the same amount after a sale as they would if they used an agent, would they?

If you are a first time buyer you really should be using an experienced professional real estate agent to look after your interests and help you negotiate a better price.

Is Your Market Hot?

Unfortunately if you are in the middle of a booming real estate market you will likely not get a significant price decrease an a home you like, in fact you may pay more than the asking price.

If a seller has the enviable position of reviewing more than one offer, including yours, then consider some or all of the following:

* Offer more than the asking price, but not much more, say $2,000.
* Make the cleanest offer possible. The less conditions you have the better. If you have a solid pre-approval, and you have given your lender an opportunity to review and accept all of your documentation, consider putting no mortgage financing condition.
* Try to accept all of the sellers demands, such as the sellers possession date.
* Make a larger deposit.
* Do not ask for things, such as appliances, if they were not included in the listing.

What About a Slow Market?

Now you call the shots! Take your time and make the seller come to your demands. One caution here is to be realistic. Don’t start your bidding ridiculously low to the point where it could be considered an insult, because quite often the seller will think it is and shut you out of any future negotiations.

Other areas that make for a profitable situation for you is depend on the position of the seller. Situations such as a marital breakup, a seller who has been transferred and paid out for his home, an estate sale, or a foreclosure often will give you the upper hand regardless of the market conditions. Therefore it is often smart to find out all of the details you can about the seller and there circumstances.

In a normal market or a slow market always ensure the following clauses are included in your offer:

* If applicable make your offer conditional to the sale of your current home. This gives you an “out” if your present home does not sell for the price you want, or if you should get cold feet.
* Make your offer conditional to financing, even if you have a solid pre-approval. Your lender may back out for various reasons not the least of which could be because they do not like your choice of home for example. Or you may not want to borrow the amount of money at the rates they are offering. This can also be an escape clause again if you should get cold feet, provided you word the clause carefully. Consequently the wording should be: “subject to mortgage financing at rates acceptable to the purchaser”.

Other Related Information

“Pre-Approval” Rates Different Than “Live-Deal” Rates
Mortgage Refinancing Tips
North Vancouver Mortgage Broker


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