The spring market is in full force! Are you prepared as a first-time home buyer or someone looking to buy their second, third, or fourth home? The spring market is here and we’re speeding ahead into summer which means now is the time to get pre-approved for the mortgage you need.
There are several reasons why the spring and summer markets are the most popular time of the year for homes to be listed on the market including…
- Nicer weather means it’s easier to explore the neighborhood or move all your belongings!
- Summer vacations and/or slower business seasons allow time to prepare a home to sell
- It’s the ideal time to maximize a home’s outdoor features and showcase curb appeal
- More houses are on the market which means more inventory for potential buyers
- Longer daylight makes it easier to book showings
But, how does this spring market compare to the spring market last year?
Prices are falling slightly in comparison to last year, but interest rates are higher to cool inflation. Economic conditions, including inflation expectations, economic growth, and housing market conditions, influence our local mortgage rates. The lender’s prime rate, which is influenced by the Bank of Canada’s policy rate, affects variable mortgage rates as well. And, competition among lenders and individual borrower factors such as creditworthiness, loan terms, and down payment can also impact the interest rate offered. This is why it’s crucial to work with an experienced mortgage broker so that you can explore all the mortgage options available to you, and make an informed decision that suits your unique financial situation.
However, the combination of lower prices and higher interest rates may tilt the balance in favour of home buyers. With lower prices, buyers may find more negotiating power and potentially secure better deals on properties in comparison to the last few years when houses were listed and sold on the same day at times. But, the higher interest rates can also encourage a sense of urgency among buyers who want to take advantage of the current rates before they rise further, which could lead to increased buyer competition.
Most noteworthy, this year a new government program for first-time home buyers rolled out called the first home savings account. A first home savings account (FHSA), is a registered plan that enables first-time buyers to save for their first home tax-free, subject to certain limits. Starting April 1, 2023, individuals can open an FHSA and take advantage of the new policy that allows for tax-free savings of up to $40,000. The FHSA also comes with an annual maximum contribution limit of $8,000 so planning where you will keep your savings while collecting your down payment is important as well. If you’re wanting to set up an FHSA or would like to learn about alternative savings accounts, give me a call, and let’s talk it out.
When it comes to buying in a hot spring or summer market these are my top 6 strategies for landing your dream home at a great price.
1. Get pre-approved for a mortgage before shopping
Before diving into the competitive housing market, secure your mortgage financing by getting pre-approved. Sellers are more likely to choose offers from buyers who have their financing in place, as it provides an assurance and avoids potential delays. In the pre-approval stage, you’ll need to collect all the necessary documents and information your mortgage broker will need to submit your application. Find out what will be needed in terms of paperwork here.
2. Be ready financially for closing costs aside from your mortgage
Beyond the mortgage down payment and the cost of moving, remember to budget for the additional expenses of closing costs, which include land transfer taxes, legal fees, utilities, and inspections. Being financially prepared for these costs is crucial as it prevents any surprises and allows you to act quickly when needed. Typically, you want to budget 4-5% of the purchase price for closing costs.
3. Define your home-buying priorities
Create a list of your must-haves and preferences before beginning your house-hunting journey. This includes determining your maximum price range, preferred neighborhoods, desired amenities, and any specific requirements. Having a clear understanding of your needs will save you time and ensure you focus on properties that align with your criteria. It’s also important that you don’t daydream about property outside of your budget. When I see buyers do this they often end up with buyer’s remorse or feeling house poor. You don’t want to limit your lifestyle just to get that three-car garage when you only have two cars anyway.
4. Find an excellent real estate agent
Partnering with a knowledgeable and experienced real estate agent is vital in a competitive market. Inform your agent about your pre-approval status, as it signals your commitment and seriousness as a buyer and often gets you more attention from your realtor as well as the sellers. Look for an agent who possesses extensive knowledge of your target area and possesses excellent negotiation skills as well. Their expertise and responsiveness will give you an advantage in the buying process so that you have the best chance possible at landing the home you want at a great price when you do make an offer.
5. Stay alert and ready to make an offer on your dream home
In a fast-paced market, be prepared for your agent to contact you with short notice to view a property. Avoid postponing these opportunities as the home you’re interested in might not be available for long. If you come across a potential home, don’t wait for the open house — request a showing as soon as possible to get ahead of the competition.
6. Prepare for selling or moving well in advance of the closing date
Keep in mind that the purchase agreement will have a closing date that works for both parties involved. If you currently own a home or need to make arrangements for moving jobs or your children’s school, be prepared for the possibility of a quick turnaround time. Ensure your current home is ready for sale or plan for a smooth transition if you need to move promptly.
I’ve bought and sold a few homes in my life, and have helped many others do the same. If you use these strategies, buying your dream home is possible even in a hot summer market. Timing is of the essence though when homes sell within hours, start the mortgage pre-approval process now — Call me at 705-315-0516 or book an appointment online and let’s get to work on locking in the lowest mortgage rate possible for you and your family. As an experienced mortgage broker, I specialize in guiding buyers through the complexities of mortgage and purchasing a home. It’s my passion, and I am dedicated to helping you navigate the process effectively.