Q & A Table of Contents
What Can I Negotiate When I Buy A Home Or Arrange A Mortgage?
From: Debbie, Ontario, Canada
Question: I'm buying my first house. What items can I negotiate for with the bank and/or mortgage company as well as the sellers of the house?
Response: There are different items to negotiate when you are dealing with the bank or mortgage company and when you are dealing with the sellers of the house.
With the lending institution the issues most likely to be the subject of negotiation are amount of mortgage, length of term, whether or not the interest rate is adjustable, the interest rate itself, whether you have to pay the up front fees generally called 'points', who pays for the lawyer -- in other words, virtually every element of the agreement. And just as an example, I recommend that you not use the lending institution's lawyer to represent you. The lender has interests that may be in conflict with yours, so you have to be careful in this area.
As regards negotiating with the seller of your house, a lot depends on local customs. In some countries, houses are sold stripped to the walls: no refrigerators, carpeting pulled-up, etc. So you need to find out what is normally included in a house sale.
The most important thing to do in advance of purchasing a house is to have it inspected by a reputable, preferably certified, home inspector. The inspector should tell you whether the house is in conformity with codes relating to plumbing, heating, electricity, etc. as well as whether there are elements needing repair. If a seller won't agree to an inspection, you may want to reconsider your interest in buying that particular house.
Some of the other items that may be worth discussing include transfer of warranties on appliances remaining in the house, repairs to the roof or other parts of the house that need fixing, ownership transfer date, adjustment of the price based on problems found by the home inspector.
In purchasing a house -- and borrowing the money to pay for it -- you should think of all items as negotiable. After all, you have to live with the consequences as long as you own the house. Thus it is fully appropriate to raise any issue you find important. It is no less important to do so respectfully and with tact. The lending institution may have strict rules -- but they also have competition. Have your lawyer tell you about relevant local laws relating to home mortgages as well as home purchases. In fact, you should also make sure you are represented by a lawyer who is routinely involved with home sales; a tax lawyer or personal injury lawyer will probably not be able to give you the advice you need.
One other thing to remember: owning a house is an expensive proposition. While the largest chunk of money may go to actually purchasing the property, upkeep, taxes, furnishing, and decorating will always present you opportunities to spend money.
Good luck and enjoy your new house.
Steve
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