Prepare to Buy A Home The Right Way
Real estate is 365 days a year, but that doesn’t mean the market is constantly busy. Traditionally, the fall and winter months see less activity in terms of available listings and closings. Hunting for the right home in the cooler months could lead to a deal as long buyers are ready to act. Before house hunting, take these measures to ensure your buying journey is a success.
1) Know What You Can Afford
Mortgage lenders will run your credit and ask to see proof of income. These factors determine the type of loan and the rate you can obtain as a buyer. As a rule of thumb, the amount of income spent monthly on the total home cost (mortgage, taxes, insurance) should not exceed 33 per cent. For someone making $50,000 a year, that translates to $1,375 a month. Remember to factor in utilities, homeowner association fees, and other home expenses. Calculate your maximum monthly out of pocket for housing costs, check your credit score, and shop around mortgage lenders to see what price range is reasonable for you.
2) Save for Down Payment and Closing
Most buyers know they will have to save for a down payment. In Canada, a CMHC loan requires a minimum down payment of 5 per cent. Sometimes buyers forget to factor closing costs when saving. These cover required processing such as the land transfer tax, lawyer fees, GST and PST, if applicable. Save an additional several thousand to help cover closing.
3) Get pre-approved
Sellers occasionally ask for proof of financing before agreeing to a contract or even a showing. Once your financing and down payment savings are in line, select a mortgage program and get pre-approved for a loan. The process will help determine how much buyers can afford.
4) Don’t settle for a home
After house hunting for a long time, it can be tempting to cave and settle on a less than perfect home. Avoid the temptation. Buy something you can see yourself living in for a long time. Make certain you actually like the house. Sleep on it overnight before moving forward with an offer. Short-term ownership is expensive. Deciding a few months down the road that the house isn’t working for you can put a huge dent in your wallet.
The Hooper Home team helps buyers find the right neighborhood at the right price for their budget all year round. Contact us when you’re ready to look for Ottawa real estate this winter.