4 Things To Know Before Buying Property
We've compiled four key things to ensure your “house and mind” are in order, before you make a move on a new house.
Homeownership is deeply entrenched in our culture and way of life. The benefit of financial stability it provides for families and generations to come is something we should all have access to. We want to encourage first time homeowners to take that plunge, but we also want to make sure you’re ready. With help of real estate expert Monique Johnson, we’ve compiled four key things to ensure your “house and mind” are in order, before you make a move on a new house.
#1: Job Security
Is your employment affected by the pandemic? To buy a home, your employment must be active, full-time and in good standing. If you are not employed full-time, but perhaps working part-time for at least a year, you’re going to need to find a second job, and be there at least a year. This way, your income reflects full-time hours and pay.
#2 Make Sure You Pre-Qualify
Are you pre-approved with a lender? Pre-qualifying is a key step, since real estate agents must know your budget and purchasing power.
Be ready to submit your income documents such T4s for the last two years. As a first-time buyer you can put down as little as 5% of the purchase price. For example, a condo priced at $650,000 means you’ll need about $32,500 plus closing costs which are an additional 1.5-2% of home price. A mortgage broker should be able to turnaround an approval in under a week, so this can happen quickly.
If you are still not completely ready to dive, you should still talk to a mortgage broker to at least set you up on a path to get you qualified as soon as possible.
#3: Be Ready to Spring
Prices are rising aggressively on a week-to-week basis due to demand. If you have a tight budget, the priority is to get it to the market and be ready to pull the trigger fast. Being prepared to compromise will help in this regard. Figure out what is non-negotiable and what is flexible for you. For instance, maybe a certain location is very important to you, but the size of the home is something you can compromise on. If you can’t afford where you want to buy, be open to buying out of town and renting it out, while you rent where you want to live.
Be ready to compromise on features – getting something turnkey is always preferred, but you may have to make some cosmetic changes like painting, replace the flooring or light fixtures – don’t let cosmetics be the reason you don’t buy a house.
Also, try and be quick. Now’s not the time to casually shop around because prices are rising weekly and it’s a possibility you can get priced out, quickly.
#4: Bid On More Than One Place
Buyers are outnumbering sellers right now, so it’s normal for an average home to generate multiple offers in this market. If a home is priced strategically under market value (which is common practice), it will attract several eager buyers. Don’t fret too much though – there are ways to win.
Offers are typically contingent on two conditions: a home inspection and financing. A home inspection will reveal any problem areas in the home while a finance condition will buy your lender some time to finalize your financing. The beauty of this is you can do both in advance of the offer date to put your mind at ease so you know exactly what you’re buying and that you can afford it. You can offer confidently and strongly, knowing this information upfront.
All in all, people just need to know this information so they’re empowered to participate in one of the best real estate markets in the world.