Buyers need to keep their cool in a hot real estate market
Don’t panic. These two simple words, when strung together, could be the best advice you get when wading into Canada’s current housing market, which is red hot. Nothing causes heart palpitations more than parting with hundreds of thousands of dollars, but a hot market doesn’t necessarily exclude first time home buyers.
Buying a house in this climate shouldn’t cause you to go into shock. Instead, consider it an endeavour in which you envision all the possibilities of the future. While you may think it’s better to wait until the market cools down, you may regret that decision later. First time home buyers who are well prepared and armed with the right knowledge will feel less stress in the long run and can start earning equity on their home sooner.
Talk to professionals
You’ve done your research and you’re still not completely sure you understand everything you’re reading. There’s a lot of data out there and market guidelines like the amount needed for a down payment are constantly changing. The Canadian Mortgage and Housing Corporation recently changed the rules surrounding down payments for houses that are $500, 000 or more – requiring a 10 per cent down payment instead of 5 per cent.
Consider talking to a mortgage broker, who will help you wade through all the information. Not only is it their job to know these rules, regulations and numbers, but they can also help you find rates you might not get on your own, especially if you’re self-employed or have a few bumps in your credit rating.
A mortgage broker will be able to guide you through the murky waters of equity, down payments, interest rates and the latest rules of the Canada Mortgage and Housing Corporation, allowing you to free up your brain space for more important things like what neighbourhood you’d like to buy in and where the closest Starbucks is.
Buy a house that will grow with your future needs
Worry less about waiting on the market to go down and remember that you’re buying a house for the future. Choosing a house that’s a little bigger than you need may actually save you money in the long run. Take for instance, the fact that most first time home owners stay about five to six years in their first home before they outgrow it.
If you were to up your maximum by just 10 per cent you may find yourself in a house that can sustain your family for longer and you won’t have to move as quickly —saving you a second round of all the fees that go along with selling and buying a home. Holding off on buying a new home for a few more years could save you hundreds of thousands of dollars in the long run.
Your real estate agent has the expertise to help you make a sound decision. It’s best to put your emotions on hold and stay rational. Remember, your home is an investment. Yes, it’s a lot of money, but keeping calm and arming yourself with the right tools to make your investment profitable will make all the difference, especially in a hot market.