Tag Archive for: first time buyers

buy a home in Comox Valley

What to do before you buy a home in Comox Valley

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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-health-to-buy-a-home-for-sale-in-comox

The Importance of Financial Health When Buying a Comox Home

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Financial Health is Important to Realizing Your Real Estate Dreams in Comox

Making sure your finances are in order and improving your financial position is essential for long-term stability and peace of mind. It doesn’t just happen, but is something you have to work on to achieve. This is especially true when you decide it’s time to purchase a home.

Step One in the Importance of Financial Health When Buying a Comox Home

The first step is to create a budget and stick to it. Begin by tracking your income and all expenses for at least a month to understand where your money is going.

  • Categorize your spending into essentials (housing, utilities, groceries) and non-essentials (entertainment, subscriptions). Use this information to set realistic spending limits and prioritize needs over wants.
  • Apps and tools can also make budgeting easier and more effective.

Step Two

Next, you should build an emergency fund. Life is unpredictable; having a financial cushion can prevent setbacks from turning into crises.

  • Aim to save 3–6 months’ worth of living expenses. Don’t be discouraged if that feels daunting.
  • Start small, even $10–$20 from each paycheck. That may feel more attainable. If you try to do too much, you probably won’t do anything. Automate your savings to ensure consistency. Over time, these small contributions will grow into a safety net.

Step Three in the Importance of Financial Health When Buying a Comox Home

Your next plan should be to pay down your debt. Debt can be a significant barrier to financial health, so it’s crucial to pay it down in a thoughtful way. High-interest debt, like credit cards and payday loans, should be your top priority. Those types of debts compound quickly and can drain your resources.

  • Use strategies such as the snowball method, where you pay off the smallest debts first for psychological wins. The avalanche method, focusing on the highest-interest debts to save money overall, is another way to do this. Whichever method you choose, be sure to make at least the minimum payments on all debts to avoid penalties.

Step Four

Now it’s time to embrace another vital component of your financial health—invest in your future.

  • Begin contributing to retirement accounts, such as an RRSP if your employer offers one, especially if there’s a company match. It’s essentially free money.
  • If an RRSP is not an option, consider a high-interest savings account.
  • Beyond retirement, explore low-risk investments, which can grow your wealth steadily over time. Even small, consistent contributions can lead to significant returns thanks to compound interest.

Final Steps in the Importance of Financial Health When Buying a Comox Home

Finally, it is essential to regularly review and adjust your financial plan. Financial needs and goals evolve. Take time annually or after major life events, like a new job, marriage, or a baby, to reassess.

  • Review your budget, savings, investments, and debt repayment progress. Adjust your plan as needed to stay on track and adapt to changes.
  • Regular check-ins help you stay proactive and maintain momentum toward your goals.

Financial health is a journey, not a destination. Consistency, patience, and smart planning will lead you to long-term stability and financial freedom. Remember, even small steps make a big difference over time!

Once you have a handle on your finances and are confident you are ready to make that big move, call Janice to continue the journey.

financial factors for first time buyers in comox valley

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

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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

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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.

gen z home buyers in comox valley

Relocating or lifestyle changes are worth it if Generation Z adults can get into the home ownership market.

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According to a survey conducted this year by Royal LePage, 83% of 18 to 38-year-olds in British Columbia believe that home ownership is a worthwhile investment. Of those who are not yet homeowners, 77% say they plan to purchase a primary residence in their lifetime. Even though they realize it is expensive to own a home, it is a priority for them.

The positive association with owning real estate amongst the younger generation was not altogether unexpected. What is surprising and promising is the practical and purposeful way they are tackling the affordability barriers.

They are focused on saving for a down payment which is often the most difficult hurdle buyers face.

Purchasing in larger urban markets like Vancouver might not be attainable. However, smaller markets such as the Comox Valley may reap the benefits. The overall sentiment from this demographic is that owning their home, regardless of the property type, is a valuable and worthwhile long-term investment.

To achieve this, they are willing to make lifestyle adjustments or find alternative ways to enter the market. This may include purchasing with friends or family. It may mean buying a property with the intention of renting part of it to a tenant. It can even mean relocating to more affordable areas.

For many of these young buyer hopefuls, current higher lending rates are a major barrier. Keeping potential buyers in the rental market longer.

Now that rates are edging lower, we may begin to see more of these potential homeowners move away from renting and into purchasing.

Among respondents in British Columbia who do not currently own a primary residence, 75% say that owning a home is a priority. Approximately half of all who responded (51%) really believe this is an achievable goal. The other 49% are split between being unsure whether they will be able to buy and those who are convinced they will not be able to own a home.

When asked why the goal of home ownership is important to them, the vast majority say they would like their own permanent place to live. Other factors they consider are the stability of owning and the restrictive landlord-tenant policies when renting.

Homeownership is a highly valued milestone for many in the Generation Z and young millennial demographic. This makes it a key priority for their future.

While some young buyers expect to receive financial assistance from their families, others are assessing their finances and making the necessary adjustments to reach their goals. They are doing a thorough analysis of their income and spending habits, and are cutting back on expenses where possible.

Remember that opportunities exist in every market. Don’t feel pressured to act immediately. Take the time to ask questions, understand, and become comfortable with the opportunities available to you.

I am here to help you with that goal and explain some of the options and possible solutions. Get in touch today!

Summary

● The Royal LePage® 2024 Demographic Survey on the Next Generation of Buyers revealed
that 84% of respondents nationally believe in home ownership as a worthwhile investment,
with variations across provinces. 1
● 51% of respondents nationally currently own their primary residence, while 35% are renting
and 13% are living rent-free.
● 74% of non-homeowners consider owning a home a lifetime priority, citing reasons such as
seeking stability and financial benefits. 2
● 54% of those prioritizing home ownership believe it is achievable, with 20% thinking it is not
achievable.
● 75% of those prioritizing home ownership plan to purchase a home in their lifetime, with
varying timelines for purchase, including 40% aiming to buy within the next 5 to 10 years. 3
● The Home Purchase Survey by Hill & Knowlton highlighted various steps taken towards
home ownership, such as saving for a down payment and reducing discretionary spending.
● Respondents reported delaying or eliminating major life decisions to save for a home, with
some receiving financial assistance from family. 4
● Canadians showed openness to alternative options for affording a home, including rental
income and co-owning programs.
first time buyers mortgage pre qualification vs pre approval

Mortgage Pre-Approval vs. Pre-Qualification

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Are you a first-time buyer wanting to buy your first home?

Maybe you are already a homeowner and are thinking about making a move.

Whatever your purpose and current situation is, there are things you can do in advance. When it comes to getting a mortgage, these things can be done to make the mortgage process easier!

Pre-Qualification for Buying your first home in Comox

Getting pre-qualified for a mortgage will give you a general idea of what you can afford. This helps you to focus on a particular price range when you start working with a realtor and shopping for your new home. Pre-qualification will look into your financial position and identify your budget for a home. It will also define what you can afford for monthly payments. It will let you know what top-end price you can manage. In this way, you won’t be disappointed. Say, for example, you go out looking, to find a house you love, only to learn you will not be able to make the monthly mortgage payments for that property. This scenario only leads to frustration!

Pre-Approval: Getting pre-qualified will give you a ballpark estimate of what you can afford for Buying your first home in Comox.

Pre-approval will say what you actually do qualify for in a mortgage. It will tell you what that mortgage amount is, based on your current income and credit history. The lender will state this in writing so you can be confident when you start your home search. A pre-approval usually specifies a term, interest rate, and mortgage amount. It is typically valid for a brief period, assuming various conditions are met. The period of time could be 2 or up to 4 months. This means you can shop for that home that’s in your budget and would have to find and complete a purchase within that time frame.

There are a few benefits to pre-approval which include:
● Confirming the maximum amount you can afford to spend
● Securing an interest rate for 90-120 days while you shop for your new
home
● Letting the seller know that financing should not be an issue. This is extremely important in competitive markets. If there are lots of buyers and not as many properties to choose from, it could be the difference
between having an offer accepted or being left out.
● Keep in mind that once you get your pre-approval, you do not want to jeopardize it.

Until your mortgage application and sale is completed, be sure you don’t do the following:

  1. Quit or change jobs
  2. Buy a new car or trade up
  3. Transfer large sums of money between bank accounts
  4. Leave your bills unpaid
  5. Open up new credit cards.

You do not want your financial or employment details to change at all until you have closed on the new mortgage.

Do you need help figuring out where to start when it comes to buying your first home in Comox? Reach out to me today and I would be happy to lend my expertise! Get in touch with me now!

bank of mom and dad

The bank of mom and dad: Taking extremes to secure children’s homeownership dreams in steep markets

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In this economy, the Bank of Mom and Dad is more popular than ever.

It’s no secret that it’s harder to buy a home now than when they were young. Canadian parents have passed billions of dollars to their adult children in recent years. It is intended to give them a leg up when entering the housing market or in changing circumstances. Up against ever higher prices, limited supply, stringent mortgage requirements and steep interest rates and taxes, they want to help.

The unprecedented transfer of wealth is in part due to a fear of missing out. , Parents want to do all they can to ensure their kids are able to realize homeownership before it’s completely out of reach.

Embracing extreme measures before homeownership completely out of reach

In the past five years, this has gone beyond providing a loan or helping with the down payment. Parents are now, in some cases, making installment payments or becoming guarantors. The latter makes them liable for mortgage payments if their son or daughter defaults. Many are going on title as co-signers to help their offspring qualify for a mortgage.

Other tactics being used amount to pulling funds out of their retirement savings or using equity from their own home. These, including a second mortgage or home equity line of credit to assist, potentially puts their own retirement at risk.

Suggest clients get legal advice if asked about parents loaning or gifting money to kids

It’s wonderful to be able to help get your struggling offspring launched. Some are getting a little too comfortable in the basement. Realtors, parents and their kids need to be aware of the potential risks in these situations.

If things go sideways, realtors and parents may be exposing themselves to an expensive and time-consuming lawsuit. When talking about parents loaning or even gifting money to their children, it would be advisable for them to get legal advice.

As an example: “Imagine a situation with a pre-construction home and rising interest rates. There’s a risk that a child may not be able to secure a mortgage by the time the sale closes. They may face exposure for damages from the developer … but exposure may be limited by their limited assets. A parent, on the other hand, may have another property or other assets, and face significant exposure because they’re named as a buyer on the agreement of purchase and sale.”

Those who come from families without deep pockets have fewer options.

More families are making the move to Alberta or further east where it is more affordable than BC or Ontario.

Unfortunately, parental generosity is increasingly necessary if younger generations are to get ahead. Not everyone wants to own their own home, but for those who do, it is more and more difficult. This is where parents or sometimes grandparents are stepping in to help out.

Gifting, early inheritances and some of the other ways mentioned, are creative ways families are getting involved.

It’s not uncommon for “children” as old as 40 and over to be the recipients of their parents’ generosity when it comes to housing.

Contact Janice to learn more!

The basis of this article comes from Royal LePage blogger Susan Doran.