Byon January 3, 2017
We know New Year’s resolutions have kind of become a joke for some people, but we feel like there’s no harm in deciding to set some long term goals for yourself for 2017, especially if you’re interested in buying a home. Now that it’s January, keep these real estate resolutions in mind to help you with your future purchase!
1) Start saving for a larger downpayment
With the new mortgage rule requiring lenders to “stress-test” insured mortgages, you’re going to want to put 20% down. If you put less than 20% down, you will have to insure your mortgage, costing you more money and subjecting you to a stress-test to ensure you can afford your mortgage if rates suddenly go up. This means that you will qualify for less.
You may have the income to afford that $500,000 home, but the downpayment has to prove it. If you don’t have 20%, it might not be the right time. 2017 is a good time to start saving.
2) Check your credit score
When was the last time you checked your credit score? It’s common for people to see their credit score for the first time while they’re trying to get approved for a mortgage. If there’s no reason for you to have bad credit, this may be fine. But if you’ve ever missed a credit card payment or bill payment, there’s a chance your score took a hit.
Most big banks want to see a score over 750, if you’re over 800 you’re golden. Make sure you don’t check your score too much though because – believe it or not – that will also impact your credit score. Your score will actually go down if you are repeatedly checking it. Lenders see this constant checking as a sign that you’re bouncing around looking for someone to lend you the money, and if you’re bouncing around too much, they won’t see you as a stable borrower.
3) Get educated
There are new rebates, taxes, and mortgage rules that will affect your homebuying decision. For example, first-time buyers now receive a Land Transfer Tax rebate of $4,000 (an increase from $2,000). If high closing costs were holding you back, 2017 might be a good year to buy.
Energy efficient homes are also becoming more common and affordable, so before you go out home hunting in 2017, make sure you’re buying from a builder that knows a thing or two about energy efficiency.
4) Make an effort to embrace smart technology
Yes, homebuyers have been searching online for new homes for years, but smart technology is taking it to a whole new level. Builders and developers are using apps to coordinate the finishing selection process with buyers. We’re seeing virtual reality used in presentation centres. And there are plenty of smart home products that allow you to do everything from control your heating and entertainment system to your security and lighting.
It’s only a matter of time before smart technology is being offered standard and as upgrades more often in new home communities across the GTA. It’s already been happening over the last couple years, and it will only become more prevalent.
5) Get pre-approved
If you’re looking to start 2017 with a new home purchase, then go get pre-approved sooner rather than later. A pre-approval with most major banks and lenders will be valid for 60-90 days, so you have two to three months to find the right home, knowing what you can afford. It’s an awful feeling to find your dream home and enter negotiations only to discover that you can’t actually afford it.
Whether you’re buying new or resale, there is a 10-day rescission period (some call it a cooling off period). During this time, you are allowed to decide whether to pull the trigger or back out. On the ninth day, you can back out, get your deposit back and walk away clean. Most of the time, the builder or developer is going to request that you share your pre-approval bank letter or mortgage approval during the 10-day rescission, and if you don’t, you can lose the property and even your initial deposit.
So, if you plan on buying a new home in 2017, keep these five New Year’s resolutions in mind!