Tag Archive for: first time buyers

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.