If you are closing on any houses for sale in Windsor Ontario, then the very last thing you want to do is go on a shopping spree. Tempting though isn’t it? You finally have the house you have been searching for and it’s only natural that you want to go buy new furniture or buy the upgraded appliances. But one important piece of advice: DON’T!
The last thing you want to do is jeopardize the sale of your new property. Buying anything that can throw your debt ratio off can terminate the mortgage company from granting you your loan. We have seen this often. Buyers will go and open new credit accounts and it changes everything. What most don’t realize, is that loan companies will do one final credit check before issuing the funds. If they notice anything that has changed, the sale could be terminated.
The best advice we can give to our clients is to read the following:
1. Don’t close accounts: While it’s always good to pay them down or pay them off before you buy a home, don’t close them all together as it looks like you have less available credit.
2. Don’t open new accounts: Pause and wait to buy furniture after you close on your home.
3. Pay bills on time: While in escrow, continue to pay your bills on time.
And remember, when buying a home, the expenses increase. It’s not just about making a monthly mortgage payment as it involves quite a bit more. Create a budget that is manageable to ensure that you are prepared for the often sudden emergencies, like a home repair. Be sure and budget in:
You will need mortgage insurance as you can’t buy a home without one. Even if you plan on renting an apartment these days, landlords want to see proof of renter’s insurance.
2. HOA fees:
If you are buying a condo or moving into a subdivision that requires HOA (Homeowners Association Fees), you will need to factor these costs into your budget. Some are inexpensive while others can be costly. You will want to see how much these fees have increased in the past several years as that may give you a good indication of what you can expect. If they haven’t risen, then you may want to find out if a huge increase is in the future.
Buyers who come from apartments are often shocked to find out what utilities cost for a home. Heating, air conditioning, electricity, water and other bills can add up often throwing a budget out of whack. Heating costs in the winter can get astronomical, so before you move in, contacting your local utility company and ask for a history of payments for the home you are buying. They can give you a good estimate on what you can expect.
Don’t forget that landscaping just doesn’t happen by itself, so plan on spending money for monthly upkeep. In the winter, you will need to remove snow and during the summer, there is always grass to mow and flowers to plant. If you are buying a home with a swimming pool, these costs can add up as well. And again, repairs never happen at a good time, it’s always when you expect it the least. So make sure that you are also able to save money with your budget.
Factoring in all of the above costs, not to mention the many others that you may need, such as buying furniture and appliances, should be carefully detailed before you even start your home search. This is why I always encourage buyers to get a pre-approval letter from their mortgage company. This letter informs sellers and agents what you can afford, so that way, you won’t exceed your budget. But remember, just because you get a pre-approval letter, doesn’t mean that it won’t be denied if you start charging up a storm during escrow.
Final advice: With your pre-approval letter in hand, ask your real estate agent to show you homes at the bottom of your price range. If you are unable to find anything, then increase the price by $10,000. So, if you have a limit of $200,000, then start looking at homes in the $150,000 range. It’s hard to start at the top of your budget and work your way down, then starting at the bottom and working your way up.