With the Canadian housing market leaping back to life and mortgage rates at an all time low it seems that there is no time like the present to buy your first home or consider a new real estate venture.
However, before you begin your quest into the realm of real estate, keep in mind these helpful hints, so you can take advantage of market opportunities while mitigating risk.
Home Sweet Home: Things to Consider Before You Begin the House Hunt
First of all, get pre-approved for a mortgage. Mortgage pre-approvals will make things easier (and quicker) when you starting bidding and also give you an idea of your financial limitations.
And just like when you pick significant others, you have your negotiables and non-negotiables. Smoker: Non-negotiable, enjoys country music: negotiable. You need to decide if you need two bedrooms, two bathrooms and a fireplace, or if some of these features are negotiable. Make sure to communicate these things to your realtor, so that he can show you homes that fit with your expectations.
For condominium complexes be sure to look over the condo corporation’s fine print. Ask to see the condo bylaws, meeting minutes and ask about the condo development’s financial status as well as its plans for the future.
Mortgages & Mortgage Rates: Shop Around
According to the CMHC (Canadian Mortgage and Housing Corporation), 90% of people that renew their mortgages do so with their current lender. This is certainly a surprising statistic as people can get better rates if they do shop around.
It can also be beneficial to consider dealing with a mortgage broker as they deal with more lenders than the average consumer and can therefore get you a better rate than the banks.
You may also consider whether a ‘no-frills’ mortgage is right for you. Many mortgages offer features that consumers do not even take advantage of and a ‘no-frills’ mortgage offers buyers the opportunity to circumvent some of those features for a lower rate. However, make sure you understand the long-term implications of getting rid of certain features, so you aren’t unpleasantly surprised in the future when you want a feature you signed away from the start.
When considering mortgage rates many buyers get tied up with the common dilemma of choosing between short-term and long-term mortgages. With the long-term mortgages you get stability, the ability to better forecast your financial situation and budget for the future. On the other hand, the short-term mortgages offer low monthly payments, which many buyers find attractive, but also carry with them a certain amount of volatility if rates increase in the future. However, you don’t have to choose between the two. Although, people tend to shy away from 3 and 4 year fixed term mortgages because they feel they don’t offer as much stability as a 5 year, statistics show you will save money with a shorter term. And with the 3.5% fixed rate on the 3 year you get the best of both terms.