With today’s interest rates at near record lows, many people are recognizing that a mortgage payment on a house can actually be comparable to what they would spend on renting an apartment or home. Perhaps you’re one of them and are ready to take a step up the property ladder.
For most people, buying a home is the most significant financial investment they’ll ever make, and there’s a lot of planning that goes into a successful transition. With that in mind, here are a few tips to help buyers navigate the home buying process:
Consider future needs. Look ahead and anticipate what your family may look like just a few years from now. If you’re a single buyer, you may someday add a ‘significant other’ to your household. If you’re a young couple, you may be planning on children. Or you may already have children whose needs will change within just the next few years. As they get older, perhaps your children will need a bedroom of their own, or some private play space. Though additional space may not be needed immediately, it’s important to consider potential future plans for a home. Keep in mind that there is no such thing as the "perfect" house. Instead, determine what’s essential for the near future – number of bedrooms, approximate square footage, community, etc. But be cautious. Look to future needs but don’t overextend yourself buying space you may not ever need.
Remember resale. Purchasing a home is a great long-term investment. However, there are many reasons home buyers may need to move again, such as relocating for a job or a major lifestyle change. Think about the length of time that the home may be owned and during your search, also consider the potential resale value of prospective properties you are viewing. I can help by sharing such valuable information as the average price of resale homes in the area, how long each property has been on the market and what features increase – or detract – from a home’s value and appeal.
Plan for maintenance and repair costs. Owning a home is a rewarding experience. However, along with a set of house keys come certain responsibilities for upkeep. A leaky faucet and unkempt lawn won’t take care of themselves, so be sure to include future repairs and maintenance in your household budget. Keep in mind that certain properties such as condominiums and town homes require less exterior maintenance and might be a good option for those who find the idea of maintaining a yard a bit daunting.
Want to know more about the home buying and selling process? Contact me for the inside scoop on your market.
On January 17, 2011, federal Finance Minister Jim Flaherty unveiled changes to Canada’s mortgage lending rules that would reduce the amortization period to 30 years for new government-backed insured mortgages. Changes were also introduced to make it more difficult for households to use their property to access financing.
Mr. Flaherty said mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. The previous limit was 35 years. Also, Mr. Flaherty lowered the maximum amount Canadians can borrow against the value of their homes on refinancing, down to 85% from the previous 90%.
The changes will come into force in stages, with adjustments on amortization and refinancing limits coming into force on March 18. In some cases, exceptions to the deadline would be allowed for financing agreements made before the March 18th date. When the new regulations were announced, Finance Minister Flaherty confirmed the minimum required down payment would remain unchanged at 5%.
These latest mortgage changes are in response to recent concerns expressed by the Bank of Canada about the record level of household debt currently being carried by Canadians, largely as a result of the near record low interest rates currently available. These tighter mortgage regulations mark the second changes in just under a year.
In February of last year, Mr. Flaherty toughened up mortgage rules to help support Canada’s housing market. The regulations introduced in 2010 required borrowers to qualify for a mortgage based on a five-year fixed-rate mortgage, regardless of whether the buyer planned on a shorter-term loan or more affordable mortgage rate. This helped to ensure that buyers would still be able to afford their payments as interest rates rose. Regulations were also introduced to reduce the amount Canadians could borrow on their home from 95%, down to the current 90% of their property value. In addition, buyers of income properties were required to put 20% down, versus the 5% down payment required for single family homes.
All these prudent measures were intended to keep the real estate market healthy and stable, and support the economy by preventing Canadians from becoming financially over-extended. The measures have been applauded throughout the financial industry both here and abroad, and are further evidence of the fact that the Canadian banking system is the envy of the world.
The minimum down payment, at 5%, will remain as is. Mr. Flaherty said
The changes to the country’s mortgage rules -- the second in as many years -- emerge amid rising concern about the record levels of household debt
In February of 2010, Mr. Flaherty moved to toughen up the mortgage rules amid worries that Canada was in the midst of a housing market bubble. The reforms, since introduced, compelled borrowers to meet standards for a five-year fixed-rate mortgage, even if the buyer wanted a shorter-term, variable rate loan; reduced the amount Canadian can borrow against their home, to 90% of the property value from 95%; and require purchasers of rental properties to issue a 20% down payment as opposed to 5%. The moves played a role, observers say, in slowing down real estate activity.
There’s a lot of information out there for sellers staging an Open House, but surprisingly few guidelines for the people who come to view them. For some, an Open House viewing may simply be an impulse activity to satisfy their curiosity about a neighbor’s home. However, for serious buyers, especially First Time Buyers who have limited experience in seeing different home styles and layouts, visiting Open Houses can be a very worthwhile exercise.
To plan an effective Open House tour, you should start with a map. Plot out the addresses of where the Open Houses are located, and the times of showings to ensure that you make the most productive use of your time. Better still, contact me and we’ll make up the list of all Open Houses in your target area, including times and do the mapping for you!
If you don’t already know the neighbourhood, then that’s the first place to start. Look at your map, and see where major transportation links are located, as well as parks, schools, shopping and amenities. If everything you see on the map looks good, then start out with a driving tour of the neighbourhood itself, before you devote some time to viewing individual houses.
If you plan on visiting an Open House, and you’re already working with a real estate salesperson, be sure to notify them in advance. Your sales representative can be a very valuable source of information about the neighborhood, and may possibly even be familiar with the individual property. Also, depending on the rules of your local real estate board, visiting an Open House without your agent present may result in conferring certain rights on the salesperson who is showing the property. If you discuss this with your salesperson before your visit, you’re ensured of having the right person to look after your interests when it’s time to make an offer. Of course, if you aren’t yet working with a sales representative, Open Houses can provide a great opportunity to not only look for the right house, but the right salesperson. What better way to see them in action, and find out quickly if you communicate on the same wavelength.
As you tour an Open House, try to see past the furnishings, and any personal clutter, and focus on whether the space and layout works for your needs. Don’t assume that what you see is what you get! Many things you see at the viewing, such as window treatments, light fixtures, appliances and even that hot tub on the back deck may not be included in the list price. Check details on the feature sheet and verify what’s included with the agent hosting the Open House.
When touring an Open House, be direct and ask questions. Remember, this is no time to be diplomatic. The real estate professional showing the home realizes that it may not be right for everyone. By keeping your comments open and direct, you help the sales representative to better understand your needs, and offer solutions to meet them.
Today’s home buyers are often young parents, trying to find enough hours in the day to meet all their commitments. Many are responding to this challenge by having live-in help assist with childcare and household chores…and that means you’ll probably need an in-law suite. In some cases, you may be one of the fortunate homebuyers who find caregiver accommodations ready-made in your new home. Other homeowners may go with the DIY approach. Here are some helpful hints to keep in mind when planning your space.
An effective in-law suite will be appealing to your caregiver, while at the same time giving you some privacy. The challenge is to do that without putting too much strain on your pocketbook. A good benchmark to help you determine what improvements are worth doing is to measure the cost against the expected lifespan of the expense. For example, putting in a 4-pc bathroom can be costly, and may not be worth doing if you only see it being needed for three or four years until the kids go off to school. In a case like that, rather than adding a full bath, you might consider a compromise of adding a sink and counter to a bed-sitting room, that could later evolve into a den with a wet bar.
On the other hand, if you can see the caregiver’s space being used long-term as a permanent in-law suite or used as additional living space as your family grows, then you’ll probably feel the cost is well worth it. Remember too, the number of bathrooms is an important factor when determining the resale value of your home. If you do it right, you have an excellent chance of re-couping some, if not all, of the expense when the time comes to sell. I will be glad to advise you on how such improvements may impact a home’s future value.
Privacy and space are important issues with an in-law suite. Your caregiver will probably appreciate a lock on the bedroom door, or at least a cabinet that can be locked. As to decorating, keep it simple. Light colours, mirrors and recessed lighting will all help make a small space seem larger. Keep it bright with extra task lighting, including a reading lamp. Choose inexpensive window treatments such as mini-blinds that let in lots of light, but still allow for privacy. Add a large framed corkboard for photos, notes and other mementos which will allow your live-in help to personalize their space without it looking cluttered. Include a writing area, either a small table or desk with a lamp and chair.
Plan your room layout in advance, and don’t forget to take wiring and other facilities into consideration before you start painting. For example, you may want to install a cable TV or internet outlet or add a phone jack, or a baseboard heater. A little planning can help make your space a pleasure for years to come.