How to prepare for a hot fall market
September 16, 2021
It’s safe to say that the housing market has experienced a lot this year. From record low mortgage rates and a limited supply of homes for sale, to material shortages and construction delays, you’re probably wondering whether now is the right time to buy a home.
Many pre-construction developments made the decision to hold off on launching until this fall season, due to lockdowns and COVID-19 restrictions. As a result, the housing market is likely to experience a demand for both resale and new builds in the coming months, as restrictions have eased and buyers are eager to purchase – especially with kids going back to school in September. If you’re planning to make a move this fall, here are some ways you can better prepare for this purchase and feel confident in your homebuying decision.
Determine your affordability by getting pre-approved for a mortgage
A mortgage pre-approval is one of the best ways to fully understand your home affordability. It can also save you plenty of time and stress during your home search. By knowing what you can afford, it allows you to shop for homes that are specifically within your budget and meet all of your needs. Mortgage pre-approval can also give you more negotiating power during a resale bidding war, where multiple offers are made on the same property – something that’s very common in a hot market. It highlights your financial stability and credibility as a buyer, and shows that you have real interest in making a deal. Whether you’re buying your first home or moving up, pre-approval is a must.
Assess your expenses and create a healthy budget
When buyers see that there is a lot of competition for a particular home, it’s common for them to want to put in a higher offer in hopes that they will get it. However, this offer may end up being higher than you initially budgeted for. Before making this mistake, we recommend fully understanding your financial situation and considering whether making a higher bid is something you can afford to do. Start by breaking down your monthly expenses to determine if you can afford your mortgage payments, along with your closing costs and monthly carrying costs. These expenses are often overlooked by some homebuyers; however, they make a huge difference in your budget in the short and long run.
Consider down payment options and how you can get help
It isn’t always easy to come up with a down payment, especially when prices are rising like they are now. Fortunately for first-time buyers, there are many programs available that can help you gather the funds to make a down payment and counter some of the costs associated with buying a home. These include the First-Time Home Buyers Incentive Program, Home Buyers’ Plan and Land Transfer Tax Rebate. Buyers can also consider having a parent or family member act as a co-signer on their mortgage to help with their application. A co-signer is someone who applies for a mortgage loan with you and legally agrees to take liability on the mortgage and pay off the debt if you can no longer make payments. Essentially, they fill in the gaps on your mortgage application by providing a strong credit score and a stable source of income to qualify.
With the fall season approaching and a hot housing market expected to continue, it’s important for homebuyers to take the necessary steps to properly prepare and enter the market. Despite rising prices and competition, there are still plenty of opportunities for buyers to enter the market and find a home that they can afford. A great first step would be to connect with an expert mortgage advisor such as those on our team at Homewise, who can walk you through the process of finding a mortgage that checks all of your boxes.
About Jesse Abrams
Jesse Abrams is Co-Founder at Homewise, a mortgage advisory and brokerage firm based in Toronto. thinkhomewise.com