Tag Archive for: buyer tips

buy a home in Comox Valley

What to do before you buy a home in Comox Valley

/0 Comments/in , /by

When you decide you’re ready to buy, there are a few simple things you can do to make the home-buying process as seamless as possible. These will also help you get the best possible deal on your new home. Your REALTOR® will help build a plan for your specific needs and timing, but you can start with the basics. Some things to consider are:

  • Making a list of your wants and needs in a home. This will help to narrow your possible choices and give you an idea of what to look for. Do you want a single-family home or a townhouse/condo? How many bedrooms or bathrooms? What other features are important to you?
  • Identify which neighbourhoods you prefer. If you’re thinking about moving to a new area, do a bit of homework online, ask other people you know, or ask your REALTOR® for advice.
  • Find out your credit score and see what you can do to improve it if necessary.
  • Use an affordability calculator or speak to a mortgage professional to figure out how much you can afford to spend on a home. Create a budget to make sure you stay on track financially.
  • Get pre-approval or pre-qualification for a mortgage so you’ll know in advance exactly what price range you should be looking at. Keep in mind that getting pre-approved is a more in-depth and formal process. Pre-qualification gives you an idea what will work for you without going through the more exhaustive pre-approval application.
  • It’s a good idea to find out if you’re eligible for any rebates, home buying plans or other federal home buying programs and incentives. There are several available in certain circumstances. If you aren’t sure what these programs are or whether you qualify, check with your REALTOR®.

I always recommend as a first step to my clients to get their pre-approval. In this way, you are not going to spend time and energy looking at properties that are above your purchasing capability. This can lead to disappointment so it’s better to begin with a realistic approach. Additionally, it will make you more comfortable in making an offer with the knowledge that financing is not going to be an obstacle.

Also, as mentioned earlier, decide what your top neighbourhoods are. Make a list of things you are not prepared to compromise on and those that would be nice to have. When you are prepared and organized, you won’t get caught up in an emotionally charged decision.

Maximize your down payment

If you still have time between now and when you’re planning to buy, try to save as much as you can. The down payment is an important part of the equation when purchasing. It will help maximize your chances of getting approved and getting the best possible rate on your mortgage. If you don’t have enough saved up to afford the home you want, creating a budget can help you save more.

You can also grow your down payment in the meantime. Put what you’ve already saved into a safe, liquid investment like a GIC or high-interest savings account, or temporarily invest your savings in an RRSP, TFSA or the new First Home Savings Account. Investments with a short time frame, such as 12 months or less, should be in savings accounts or cashable GICs. There are a number of providers that offer high interest bonuses to new accounts, so it’s worth doing a bit of shopping.

Buyers who haven’t owned a home in the last four years should also take advantage of the FHSA, which lets you contribute up to $8,000 per calendar year. You get a tax deduction for each contribution, and there is no tax payable when you use the funds to buy your first home.

Additional considerations for first-time home buyers

If you’re a first-time home buyer, there are some additional things you may need to be prepared for. For instance, some first-time buyers aren’t aware of how long the home buying process can take. The time involved in the home buying process can differ from buyer to buyer. Some people are able to find a home in a couple of weeks and others can take much longer. It will depend on your particular must-have list, what is available in the market place, how active it is, and how many others are out there looking.

Something else to keep in mind is that sellers will want a certain time to close. It can vary and may depend on where they are going. Final transfer of ownership could take place in a short or longer period of time after the agreement is signed.

Depending on your budget, you may need to start with a smaller or more modest home for your first property. This can allow you to build both your equity and your experience, while still getting your foot on the first step in the property ladder. Don’t put yourself in a situation where you buy more home than you can realistically afford or maintain. While you may be tempted to stretch your budget to get a home that seems perfect, try to resist. Being “house rich, but cash poor,” can be a very stressful and risky way to live.

For people who are currently renting, a mortgage payment may be close to what they pay in rent. But there are all kinds of other expenses associated with homeownership. Property taxes, insurance, and upkeep are some. If you don’t have exact numbers, use 2% or 3% of the purchase price to estimate your added monthly ancillary costs. You could try living for six months as though you already own the home. See if you can manage it before you make the leap.

Get in touch with me to learn more about how to buy a home in the Comox Valley!

financial factors for first time buyers in comox valley

Financial factors first-time buyers should consider on their path to homeownership

/0 Comments/in , /by

Buying your first home is a major milestone . It can be an exciting time, but also can be an anxious one. From mortgages and down payments, to government programs and house hunting, there’s a lot to take in. With the right tools and expertise, it is easy to understand the buying journey. The first step is to make sure you’re financially ready to purchase your first home.

When buying a home, everything comes down to your wallet. Your monthly income, debts, and credit score will determine the size of the mortgage you qualify for. This will determine what kind of home you can buy and in which location.

Here are some financial factors to consider on your path to home ownership:

Assess your fixed and variable expenses

To get a clear picture of the type of home you can afford, you need to understand your finances. Finances include net income, expenses, debts, and your credit score. First, determine your monthly income and expenses, both fixed and variable.

  • Monthly net income: include your after-tax, take-home income. This should include other income sources like commissions, bonuses and dividend profits.
  • Fixed expenses: regular, monthly expenses like rent, car loans, insurance fees, utilities, etc.
  • Variable expenses: these can change from month to month. They are things like groceries, gas, pet care, and discretionary spending such as dining out, concert tickets, personal care, and other lifestyle expenditures.

Calculate your debt-to-income ratio

When assessing your finances for a mortgage, a lender will consider your debt-to-income (DTI) ratio to determine your borrowing risk. The lower the percentage of your DTI, the better.

To calculate this ratio, divide your total monthly debt payments by your gross monthly income. This includes debt such as car payments, student loans, rent and utilities. If your DTI ratio is above 50%, you may need to take steps to lower your debts and expenses to improve your ratio.

Conduct a credit score check

A solid credit score is vital for first-time homebuyers. Usually, a score above 660 is good. It will improve your odds of accessing your preferred mortgage products. A score above 760 is ideal, giving you the best offers and credits available.

By checking your credit score before pursuing a mortgage loan, you can assess what areas may be helping or hurting your score. A missed payment or outstanding balance could make a difference.

Understand a pre-qualification vs. pre-approval

Before you get your heart set on a home, it’s important to differentiate between a mortgage pre-qualification and a pre-approval. Essentially, pre-qualification is a general estimate of your finances. It will show the ballpark range of a mortgage and interest rate you would qualify for today. This can help you to narrow down your home search to property within your price range. A pre-approval is an official assessment by a lender. It will show you the actual mortgage size and rates available to you.

Determine your down payment and closing costs

Sale price and mortgage payments are the obvious costs. There are other visible and hidden expenses that you need to consider when it comes to buying a home. Down payments and closing costs are the main two.

  • Minimum down payment requirements: Your down payment can range from as little as 5% to more than 20%. It will depend on how much you have available to put down. Any homes purchased over $1 million in Canada require a minimum 20% down payment. Homes purchased with less than 20% down will require mortgage insurance.
  • Closing costs and fees: You should estimate that closing costs will equal approximately 3-4% of the purchase price. Legal fees and land transfer tax are included in this percentage. Additional costs such as those related to moving, inspection, etc. you should prepare for in advance.
mortgage changes in bc real estate

Navigating through mortgage changes in BC real estate

/0 Comments/in , /by

Recent changes in the housing market present exciting opportunities for homebuyers. As your Comox REALTOR®, I can guide you through these updates. A mortgage broker can help you build effective plans to achieve homeownership goals. In this way, you can establish what you are able to afford. This is one way to streamline your search for a property.

Knowing these new rules and guidelines will help with strategy and future goals of climbing the “real estate ladder.”

Expanded amortizations for first-time homebuyers

Starting December 15, first-time homebuyers will have access to 30-year amortizations. This change can be of benefit in two significant ways:

  1. Lower income requirement. By extending the amortization period, the income required to qualify for a home purchase decreases. This means more buyers can meet the necessary criteria.
  2. Reduced monthly payments. A decrease in monthly payments will make homeownership more financially manageable. For instance, on a $600,000 purchase, the monthly payment could drop by approximately $250, providing greater flexibility in budgeting.

Increased insured mortgage cap to $1.5 million

High income, but difficulty saving for a down payment? An increase in the insured mortgage cap to $1.5 million can accelerate your path to homeownership. Previously, purchasing a $1.4 million home required a down payment of $280,000. Now, as of December, clients can potentially purchase the same property with a down payment of about $115,000. This will save a whopping $165,000.00 in upfront requirements.

This change is also advantageous for “right-sizers” who want to downsize. It allows the buyer to allocate more funds from the sale of their larger home toward retirement. Then you can put less down on a new, smaller property. However, you should keep in mind that closing costs, typically between 2 and 4 percent of the purchase price, need to be accounted for in each scenario.

For a $600,000 purchase price, anticipate that clients will need an annual income of approximately $150,000 to meet today’s stress-test requirements.

Switching lenders at renewal: A business opportunity awaits from mortgage changes in BC real estate

While you may not initially think about how switching lenders can benefit you, it’s essential to understand that mortgages encompass more than just interest rates. The Canadian Mortgage Charter now allows insured mortgage holders to switch lenders at renewal without undergoing a stress test. This change opens up opportunities for borrowers to shop around for better rates and terms, potentially saving thousands of dollars.

Tax-efficient savings strategies around mortgage changes in BC real estate

As well, two important tax-efficient savings methods have emerged that can empower you on your journey to homeownership:

  1. RRSP withdrawal limit increase. The amount that can be withdrawn from an RRSP has increased from $35,000 to $60,000 per borrower. This change provides additional funds for you to put toward your down payment.
  2. First-time home saver account. Introduced in 2023, this account allows you to save $8,000 per year in contribution room, which reduces your taxable income.

Unlike RRSP withdrawals, funds from this account do not need to be repaid and any gains earned within it are tax-free. This account, however, has a sunset clause in 2028, making it vital for clients to act quickly to maximize its benefits.

These recent changes create valuable opportunities for purchasers. Make informed decisions on your path to homeownership. Speak to your mortgage broker about the implications and opportunities surrounding expanded amortizations, increased mortgage caps, flexible lender options, and tax-efficient savings strategies.

Call me if you would like to connect with a competent, knowledgeable, and experienced mortgage broker.