Buying a home requires careful planning and consideration. As market trends change, buyers need to be aware of the situation in their area, and they need to create home buying goals to match. However, it can be tricky to come up with those goals, especially if you’re newer to the market. With that in mind, here are some tips to help you come up with goals you can achieve so you can secure your mortgage faster.
Understand the market trends
It’s pretty hard to create realistic home buying goals if you don’t have a clue what’s happening in the market you’re hoping to buy in. If you don’t have any knowledge on prices and interest rates, how can you shape your goals to fit the trends? Here in Barrie, we’re seeing the impact of rate hikes and inflation like everywhere else in Canada. An overnight rate of 2.5 per cent has taken the edge off demand in the housing market and lowered housing prices in Barrie. According to Zolo, the average sold price is currently $751K, a five per cent monthly decrease and 15.1 per cent quarterly decrease. Homes are spending an average of 23 days on the market, with a selling to listing price ratio of 97 per cent. All of these numbers indicate a slowdown, with homes selling for less, and more slowly. While this is good news for buyers, it also means buyers have to contend with the higher rates, which might present a challenge for buyers on a budget.
It’s also important to have a clear timeline on your buying goals. If you want to buy a home within the next three months, you’ll be dealing with different prices (and perhaps different rates) than if you buy in eight months. Having a specific timeline will help you stick to your buying goals and ensure they remain achievable for you.
Know your debt levels
Your debt levels will be a critical part of determining realistic buying goals. Depending on how much debt you have, you may be able to qualify for a higher or lower mortgage amount, with higher or lower rates. The higher your debts, the less likely you are to secure a traditional mortgage product, which might mean looking at alternative lending solutions. This is important to know ahead of time, so you can plan accordingly. Knowing your debt levels, and paying it down, will help ensure you can achieve your buying goals.
Your credit score is also connected to your debt and your mortgage. Higher credit scores help achieve better mortgage rates and products. Paying off debt will help you build your credit score, so you can have the strongest mortgage application possible. Other ways to help build your credit score include not overusing your available credit, and being sure to make your payments consistently and on time. You can read more about building your credit score here.
Determine an accurate budget
Your home buying goals will all depend on the budget you’re working with for your purchase. You shouldn’t go searching for homes without deciding on a budget, because without narrowing down your options you will lose time looking at homes you can’t afford. So, how do you figure out your budget? Think about your income, debt levels, area you want to buy your property, and how much your current property is worth (if applicable). These factors will shape your buying budget, and once you have it, stick to it. Don’t get sidetracked by homes out of your price range.
Along with your budget comes your down payment, which is the biggest upfront cost you will need to prepare for. You are looking at saving up tens of thousands of dollars, or more, which requires mindful budgeting. The amount you can put forward as a down payment will affect your overall budget, so incorporate this into your buying goals.
Write down your needs
Your home buying goals should focus on what you need in a home. If you’re part of a family of five and want to live in a home with a big yard, this will likely mean one of your goals is to purchase a larger home in the suburbs, for example. Write out your housing requirements. Think about home size, property size, bedrooms, access to amenities, whether you want to be near schools, and if you want a more rural or urban setting. All of these needs will result in a goal for the kind of property you want to buy.
Start small
Finally, create the most achievable home buying goals by dividing the process into smaller, attainable goals. Don’t jump to house hunting immediately, for example. You will find yourself overwhelmed and aimless. Lay out a step-by-step plan from start to finish. For instance, begin by comparing your income to your debts to think about an estimated buying budget. Get in touch with a real estate agent to help you determine the value of your current home. Pay off debts if necessary. Get a mortgage pre-qualification. All of this should be done before you start looking at homes. If you take things one task at a time, you’ll be less overwhelmed.
Creating home buying goals is a pretty essential part of helping the process go smoothly. Though it takes time and effort, it will also save you stress. Plus, remember you don’t have to do it all alone. You can reach out to a mortgage broker to help you get started, and they will be by your side the whole time. We can guide you step-by-step to keep you on track to securing the mortgage product you deserve.
If you have questions about your mortgage, get in touch with me!