What property types should you consider when buying a home? Here are some key factors to understand when making your decision!
Buying and selling in the spring market are both likely to be interesting experiences this year. Now that the market has calmed down a bit, buyers are in a better position. However, sellers are likely still able to secure a good sale on their properties as well. If you’re planning on buying or selling this season, how can you start preparing? Here are our top tips!
If you’re buying…
Get your pre-approval
You will probably never come across a post about buying a home where we don’t recommend getting a pre-approval. A mortgage pre-approval is one of the most important actions in the buying process. It’s a simple step that familiarizes you with the market, gives you an idea of the mortgage you can afford, and allows lenders to get to know you. When you get pre-approved, this means a lender has taken a look at your finances, and given you a rough estimate of where you potentially stand in the housing market. This means you can form an idea of what you can afford before you go house hunting. You can see the appeal here – you can focus your search, and understand how you can improve your finances, if necessary.
Of course, a pre-approval doesn’t mean you are approved for a specific mortgage amount. It just means that based on your current situation, you know what you might be approved for, if your circumstances don’t change. With this in mind, do your best to maintain your finances after securing your pre-approval!
Consider your down payment
Your down payment is the biggest upfront cost of buying a home. Therefore, it requires a lot of consideration to ensure you have the right amount saved! If you’re hoping to buy this spring, you have probably been saving up your down payment for a few years. Now it’s time to decide how much of the housing purchase you plan on covering with your down payment. Down payments can range from five to 20 per cent or more of a home’s purchase price. Of course, the more you contribute now, the less you will have to pay in monthly mortgage payments. However, some people like to contribute a smaller down payment so they can enter the market a bit quicker.
The price of the home will play a big role as well. Homes up to $500,000 only require a five per cent down payment. Homes between $500,000 and $1 million need five per cent on the first $500,000, then 10 per cent on the remaining amount. Finally, homes that sell for $1 million or more require a full 20 per cent. For any housing price, if you choose not to contribute 20 per cent, you will have to pay for mortgage default insurance. The size of your down payment depends on several factors, and as a buyer you need to decide how different down payment amounts can impact your housing plans.
Be specific with your housing needs
Finally, buying this spring requires you to make a detailed list of your housing requirements. This includes property type, location, budget, etc. Springtime is often one of the busier times of year in the real estate market, so you are likely to face a bit more competition. This means it’s important to be ready to enter the market with a specific set of needs, so you can narrow down your options more quickly. It’s better to start house hunting when you have a good idea of what you’re looking for, instead of blindly searching the market. This way, you can act quickly and be ready to put in an offer right away!
If you’re selling…
Secure a real estate agent
On the other side of the housing market, we have sellers. If you’re hoping to list your home this spring, how should you start? One of the first things you should do is contact a real estate agent to represent you in the market. It’s important to ensure your agent is someone who has experience with your kind of property, and preferably has a good grasp on the market in your area. Agents can help you decide on an appropriate listing price for your home, negotiate offers from buyers, and ensure you understand everything in the contract when you eventually sell. Buyers are also far more likely to pay attention to your listing when you have an agent on your side, as opposed to trying to sell your home alone. In the interest of efficiency, security, and success, having an agent on both sides of the buying-selling spectrum is essential.
Think about your next moves
If you’re selling your current home, what does that mean for your next steps? Are you planning on buying a new house? Are you going to start renting? Maybe you’re hoping to move to a retirement community, or you’re expecting to move into the home of one of your children. Whatever the case, you need to have these plans in place before you sell your home. Of course, you know you will have to go somewhere once you sell, and you probably know where you’re headed. It’s just very easy to get caught up in the process of selling, and forget to give as much attention to your next steps. This is your reminder to make sure you take the time to ensure your future plans are set up before you sell!
Lastly, it’s very important to be patient in the market. Buying and selling have both been rollercoaster rides over the last few years. As it stands, the market is far less hectic than it was just one year ago, and demand for housing has declined. This means you likely won’t be looking at dozens of inflated offers and a lightning-fast turnaround time when selling, as you may have last year. This doesn’t mean you can’t sell your home this spring! It just means you will be dealing with a market that is much calmer and balanced. While you can likely secure a good sale on your house, you will need to have patience!
Buying and selling this spring can both be successful journeys, as long as you take the time to prepare yourself. Take advantage of tools like pre-approvals, get in touch with real estate agents, and if you’re buying, consult a mortgage broker! We can give you a good head start by helping you secure your pre-approval, work out your budget, and find the right mortgage products.
If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.