The first time home buyer is often overwhelmed with details; real estate, lawyers, bankers, and then there are always the “friends” with their sage advice.The reality of the situation is that no one can advise you on your best way to proceed.However, some can help you make good decisions even if it seems they are standing in your way.
First, real estate agents are middlemen.Their job is to put the buyer and the seller on mutual ground through persuasion of both in regards to price and closing.The more they can convince the buyer to pay, the more money they will make.While it is the seller who contracts them and pays them out of the final sale price, it is the buyer who in reality is paying for it.So, the real estate agent has a vested interest in every sale and it is to neither the seller or buyer.Often buyers will contact an agent to assist them in finding a property to buy.The fees are split between the two agents.Again, the buyer is paying for it in the end.
Now to the lawyers.First, a lawyer is used to review the contracts for sale then if all is done properly, they will search the property title to ensure there are no liens against it.Then the property ownership can be transferred and taxes paid.When they are satisfied all is done properly, they will allow the closing of the sale.
If the buyer and seller can bypass the real estate brokers on a property that is not listed, then a lawyer will do exactly the same work as a real estate agent.However it is up to the buyer and seller to negotiate the price and closing plus any sundry details involved in the sale of the property.A lawyer can prepare a binding offer to purchase in this case.There can be many thousands of dollars saved.
Now to the banks or money lenders.Buying a property is all about risk.
Consider that you have a double income and no children.You have a large disposable income and affording the home of your dreams is easy; right?Not so in the eyes of the lender.First they are willing to lend you the money to purchase your dream home but they also want to be sure that they are going to be paid for it.They want to ensure that you can afford to pay your mortgage after all the monthly expenses are covered.For this they have a formula that they use that says your mortgage should never exceed 25 to 30% of your net monthly income.
Now, that double income?Well the wife’s income can be slashed in half or in some cases ignored.So that leaves a single income as being the source of repayment.Why?What happens when children enter the picture and her income falls?This is exactly their assessment of the risk.They also consider income stability and previous credit history.In short they want to minimize their risk of lending.
Still, they are there to earn money and to get their returns they want to be assured you are going to be able to repay the loan and still be able to live comfortably.In short, they are selling you their money.It is a business arrangement; one they want to be mutually satisfying.