Contributor: Cindy Chan, senior negotiator with Charlie Chan Realtors, Singapore. Contact Cindy at email@example.com or call +6577338992
Buying a home soon? You sure must be excited. Oh how exciting are the prospects of looking at one house after another, and imagining building a life in them soon! But then again, just as much as you’re excited, this is also a very tense moment for you. We’re talking about a house that could eat up most of your monthly income on mortgage, on a house where you look to raise your children in – so the choice you make must be right! Oh the pressure – there’s hardly any room for mistakes!
5 home buying scenarios
But hey, with a little help and with a little preparation, things may not be so difficult at all. Here are some 5 home buying scenarios you should never be in and tips on how to avoid being in them:
Scenario No. 1: Paying for an Overpriced House
No one wants to lose money over something that is definitely not worth it; especially not if it has to eat a huge chunk off of the monthly budget.
How to avoid this scenario: Always make sure that you know everything the price of the house entails. Know everything from the actual price, the negotiating price, which type of monthly mortgage to sign up for (Adjustable rate or Fixed Rate), and how much the monthly rate would be. Get a separate and independent price assessment on the value of the house and make sure you do your own part as well: shop around for as many similar houses as you possibly can and weigh in on the odds. Additional Tip: use resources like PropertyReviews.my to check for pricing information.
Scenario No. 2: Signing up for a house with hidden damages.
This is worst than paying for an overpriced home. This is outright injustice, a scamming of sorts. The last thing you want is to pay for the down payment, pay for the monthly mortgage, and take in the burden of the repair costs!
How to avoid this scenario: Get a separate house inspection and make sure that your sale contract has a specified protection clause in case you find a hidden damage thereby charging the previous owners liable for the cost of the repairs.
Scenario No. 3: Buying in a Seller’s Market
As its name implies, the market is on the seller’s side, and therefore the prices would never be in your favor.
How to avoid this scenario: Postpone the purchase if you can and wait a bit until the market gets better for you. Otherwise, you’d have to rely on your haggling and bargaining skills on this one!
Scenario No. 4: Sealing your home purchase deal even before you could sell your old house.
Unless you own tons and tons of money, this is nothing but bad news. This will mean that you’d be losing money to the new home while still paying for the upkeep of your old one. Of course, you can’t just move and leave the other one behind in a bad state; you still have to maintain it to keep its market value.
How to avoid this scenario: You either pay a ‘reservation fee’ that makes you semi-own the house for a short period of time, thereby giving you enough time to dispose of your previous house, or not buy a house until your old one is sure to be sold and find a temporary shelter in between.
Scenario No. 5: Running short on budget for closing costs.
Sometimes, the closing costs can get so overwhelmingly high that they are off of most homebuyer’s budget.
How to avoid this scenario: go to your mortgage agent and ask for a Good Faith Estimate (use JPPH tools – click here). This is something that you can get even before you sign up to buy a house. You can choose to either pay it up front, or if it gets out of budget, you can always add it up to your monthly mortgage.
Editing by Jin Hsu