So, you’ve decided you’re ready to buy a home this year! This will likely be one of the most exciting projects you take on this year. 2021 is already shaping up to be an interesting year for the housing market, and you’re entering it at a super busy time. Interest rates are low, the supply and demand balance is intense, and competition is high. If you’re going winter house hunting this year, it’s time to get your plan ready!
Of course, the real estate market changes a little bit every year. There are typical trends we usually see, but there’s always a bit of a shift to get accustomed to. Winter house hunting in 2021 is already super different from last year. The Bank of Canada didn’t introduce the interest rates we’re seeing now until late March 2020. That means this is the first winter with these interest rates in years, and the winter market is going to be a lot busier this year.
See a broker first
So, where to begin your winter house hunting? Well, don’t go checking out properties just yet. In fact, don’t do much of anything before you visit a mortgage broker. Brokers are a key part of helping you start your homebuying process. Don’t feel like you need to have your budget totally worked out before making an appointment – it’s okay to come in without all the answers! Part of a broker’s job is to help you work out a realistic budget for a home. There’s no point looking at homes outside your budget, and brokers can give you a clear picture of what you can consider.
More on your budget…
Your budget will mainly be based on your income, and your average expenses. Basically, a budget depends on the money you bring in once taxes and other payments are out of the way. Obviously, everybody’s budget is different, meaning everybody’s house hunt is unique.
If you’re looking to buy a home in the Barrie area this winter, consider these figures. Detached homes are selling for an average of $787K, townhomes for $531K, and condos for $406K. Of course, these prices will vary, but this is the range you can expect to see.
Finally, remember that your budget doesn’t just need to cover the cost of a home. Make sure you take closing costs like property taxes, utilities, and moving costs into consideration as well!
Getting pre-qualified for a mortgage is a super important part of buying a home, and it’s the first step in the mortgage process. A mortgage pre-qualification is when a broker gives you an estimate of the mortgage amount you can afford. Once you have an idea of the mortgage you can likely get, you can really start looking at homes.
A mortgage pre-qualification doesn’t guarantee you a mortgage, but it really puts you ahead during your house hunt and home buying process.
Saving for a down payment
You don’t need to have found the perfect home to start saving for your down payment. In fact, you should be saving long before you start searching. True, your future home’s purchase price will directly affect your down payment amount. But remember your budget, and work backwards to estimate a rough down payment. Some down payments can be as low as 5% (this comes with a set of special guidelines for mortgage default insurance).
How do you actually start saving for such a big payment? A common method is to start contributing regularly to an account. This way, you can be sure you’re consistently putting money towards your down payment. There are lots of little tricks you can use to help save for your down payment. You can look at an older blog post here that focuses on tips to help you save!
A word of advice…
It’s best to make a down payment from your own income and funds. This means you should try not to take out another loan just for a down payment. Your mortgage will already be a big piece of debt for you to take care of, so you want to keep your debt as low as possible!
Buying for the first time?
If you’re a first-time home buyer, take a look at the First-Time Home Buyer Incentive! This is a program that allows new buyers to access lower mortgage payments. The Government of Canada shares the home equity and contributes 5-10% for a down payment. This saves first-time buyers money, and it allows them to apply for a smaller mortgage with a larger down payment.
You can find full details on the incentive here.
Prepare for competition
If now is the right time for you to enter the housing market, you need to be prepared to move fast. You need your winter house hunting plan all set up, so you’re good to go as soon as possible. Taking these steps will definitely give you an advantage, and prepare you for the homebuying process.
If you want to buy a home and you need help with a mortgage, get in touch with me! You can give me a call or contact me here.