Buying a Home? – Conditions to Consider When Making an Offer
When it comes to buying a home and it’s time to make an offer it’s not always easy to know what conditions are best to include. Country properties especially have unique features that some buyers aren’t always familiar with and it’s a good idea to ensure everything is disclosed before finalizing an offer. Here we break down common country conditions buyers should consider when making an offer.
Figure Out Your Financing For Buying A Home
One of the most common conditions to consider when buying any property is financing, the process of obtaining the necessary funds to buy the house. Before you even start looking for a house find out what you can afford. The Canada Mortgage & Housing Corporation suggests that your monthly housing costs should not be more than 35% of your gross monthly income. While most people need to get a mortgage to pay for a home you as the buyer still need to put a deposit down of your own money which ranges from 5-20% of the purchase price.
Before you apply for a mortgage take a moment to check your credit history. Bad credit history can result in a declined mortgage application. When it comes to mortgages you can work with either a mortgage lender or mortgage broker. There are a few questions to consider when choosing the best mortgage that works best for you. Ask yourself; “do I want a mortgage with a fixed interest rate or one that can rise or fall?”, “how long of a term do I want?”, and “how often would I like to make payments toward my mortgage?”.
Home Appraisals & Approvals
Another important aspect of financing to be aware of is that while you might be pre-approved that does not mean the property you are placing an offer on is. The bank still has to provide final approval before you have financing. For example, if a property is listed at $400,000 and you put an offer in at $500,000 but the bank evaluates it as only being worth $400,000 you will be required to pay that additional $100,000 plus your deposit. At that purchase price level, the minimum deposit requirement would be 5% or $20,000. Therefore, you would be required to pay $120,000 of your own funds at the time of purchase.
Whether it’s a house in the suburbs, a cottage in the country, or a place in the city know what you can afford and consider placing a financing condition in any offers you make. This way you can stay within your means and feel more secure in your offers.
Get a Home Inspection
While not everyone views a home inspection as a necessary condition, it can be very useful especially when you become a new homeowner. A home inspection gives you a snapshot of the status of the property. They provide you with insight for any future repairs that will come up and allow you to start saving for them.
Home inspections are a great way to get familiarized with the workings of the home, especially if it’s your first country property. This includes knowledge about turning off the water and furnace maintenance. A home inspector will also identify issues you might not already be aware of or know how to identify. Detecting mold and determining the structural integrity of a house are a couple of things home inspections can identify.
Read more about home inspections.
Get Home Insurance
When it comes to owning a home having insurance is non-negotiable. The bank won’t grant you a mortgage loan without it. Just like any other type of insurance having home insurance can protect you against damage or loss to your home, damage or injury to others who visit your home or property, accidental damage you cause to somebody else’s property, and more.
When it comes to determining your premium, several factors are considered. It’s important to know the history of the house as it can play a huge role in determining the premium. If the property has already had a lot of claims against it you’re most likely to pay a higher premium. Other considerations include but not limited to are the type of property, characteristics of the property (such as age, size, location, & replacement value), the value of the property, and the neighbourhood crime rate.
Taking in all these factors it’s important to shop around for the lowest premium and while you can’t hide the history of the property some companies might offer you a better deal than others.
Read more about home insurance.
Water Potability & Flow Rate in Country Properties
When it comes to owning a country property one thing to be aware of is most properties have their own well that supplies the water. So when it comes to making an offer on a rural property it is a good idea to include a water potability condition to ensure the water is safe for drinking. Not only is it important for you to know if the water is potable but most finance companies will require a water test before granting you the financing. Another, benefit of a water condition is to ensure there is enough water for normal household use.
Life in the country is often seen as slower-paced and simpler but there is still a lot of maintenance that goes into owning a country property including septic systems. Being out in the country, properties require their own septic systems, or onsite wastewater treatment system. When making an offer on a house it’s a good idea to include a condition on the septic system to ensure it is in good working order, the baffles are in good condition, that it is actually located on the property, and that the weeping bed is not soggy.
It is also important to know the limitations of the septic in order to keep them healthy. The number one reason for premature septic system failure is lack of proper care and maintenance, overuse of the system, or poor soil type. It is important that you don’t flush anything down the toilet that doesn’t belong. This includes feminine products, toxic cleaners paper towels & wipes. It is also important to be aware of the septic tank’s location and ensure it remains accessible and properly taken care of. For example, septic tanks can get in the way of pools, driveways, or other potential landscaping, it’s important to keep this in mind.
If properly maintained septic systems should last between 20-30 years with drainages happening every 3-5 years. So while they might sound intimidating septic systems if properly maintained and cared for are just another part of life in the country.
Read more about septic systems.
When it comes to owning a country home many people love having a wood fireplace to curl up in front of. So it’s important to know your fireplace is safe to use. A Wood Energy Technology Transfer (WETT) certification gives you that peace of mind. It’s a good idea to include this as a condition when making an offer on a property with a wood fireplace. This ensures proper inspection of all wood-burning appliances to guarantee proper installation and good working order. Insurance companies will also require a WETT certification.