Thursday Trim the Trash Time: June 22, 2017
Wasteful Home Buying Expenses
Good morning and welcome back to trim the trash time. As we are in mortgage week today’s theme is going to be about things you can trim from your new home-buying budget. Buying your first home is usually the most expensive thing you have ever done. The problem is that you are your most vulnerable at this time as well. It can be easy to fall into the trap of thinking any additional cost is just part of buying a home. The problem is all these additional costs really add up. You have to be in a mindstate of limiting costs when buying a home. The truth is everyone will try to get a little more money out of you. Here are a few things you can limit when buying a new home.
1) Mortgage Insurance
One thing that many people don’t realize is that having mortgage insurance doesn’t necessarily cover you. Mortgage insurance has what is called “post-claim underwriting.” When the decision whether or not to pay up comes after the claim is made it can get dicey. Those few questions you answered when applying for the mortgage insurance come into play. If you answered any of them incorrectly, you can have your claim denied. This is the case even if you don’t commit fraud. Answering a question incorrectly with no ill-intent leaves you uncovered. The banks really push this product and there is a reason for it. When they know it is essentially free money for them, it becomes a huge goal for them to sell as much as possible. Look to secure your own personal coverage that is more geared towards your needs and wishes.
2) Realtors
Buying a home can be confusing so having a realtor helps big time. I am a big fan of real estate agents but it is important to understand their fee. Fees usually range from 2.5-3% of the home’s purchase price and money isn’t usually made unless the home is sold. Those ranges are acceptable for an agent who truly has your back and will go to bat for you. The thing with real estate agents is that their job is a service position. Make sure you are getting the service you deserve but are also doing what the agent needs to do their job. If that is the case, paying for their service shouldn’t be a problem. The key is to know what they will be paid and hold them and yourself accountable for it.
3) The Banks and Mortgages
I’m not a fan of the bank for pretty much anything except my chequing and savings accounts. The same holds true for mortgages. Like I mentioned with the section about realtors, service is very important when it comes to the biggest purchase in your life. The same holds true when it comes to your savings and investments as well. Bank’s have it tough because they are a volume dealer so individual attention often falls by the wayside. Having a licensed advisor or broker that has your back can save you time and money. Again, we are all aware that moving into a new home will cost you. The key is to get the service and attention you deserve when taking the plunge. Make those dollars count.
Sort of like getting married, buying a home has a way of taking every last cent you have. There is a whole industry based on you dishing out extra dollars. Make sure you go over every expense so that you don’t get gouged or pay for unnecessary costs. Stay slim and trim and be conscious because if you don’t it will definitely cost you.
Thanks for reading today and don’t forget to tune in tomorrow for my final reflection on the week and my live Facebook recap of the week’s events. Have a great day friends!
“For too long, tricks and traps in mortgages, credit cards, and other financial transactions have stripped wealth from working families.” – Jeff Merkley
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.
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