Whether you're a first time Buyer or not, there's a lot of information to digest - not to mention a lot of documentation to execute - once you decide to embark on a dwell hunt. The learning curve can seem especially steep when you are doing it the first time, especially since a Buyer can only understand how the real estate market is oscillating by being actively engaged in it.
Are you a first-time Buyer? Allow me to gently offer you My Crash Course In First Time Home Buying.
What I find fascinating as a realtor with 28 years experience, is that the journey of most every Buyer is different. This is because the Toronto real estate market comprises dozens of niche -micro-markets which are each collectively trading according to the supply available for sale and the demand and desire of its potential prospective Buyers. As a result, the experience of each Buyer will vary depending on their wishes, wants and needs. In broad terms, the real estate journey of any Buyer will vary depending on the locations they're considering, the dwelling types they're pursuing, and the price parameters in which they're shopping. Add to that their own specific criteria, such as it must be in a specific school district, have a particular exposure, have suitable storage for, say, a kayak, or include an in-law suite for a parent, and all the other infinite possibilities one might require in their shelter, promises that the path to your purchase will be entirely unique.
Furthermore, no matter how well-informed you believe you are on the Toronto real estate market, until you are actively engaged in your specific market segment, you have likely been relying on false constructs of expectation. Why? because the market is always in a state of flux that reflects the dynamics of that very moment in time, and it is only through your process of viewing, comparing, and assessing actual properties listed for sale in your preferred price parameters that will ultimately allow you to understand what options are available. This is how I help my Buyers establish the framework of their own personal housing matrix.
Looking to create your personal housing matrix? Here's my post called How To Search For Your Next Property Purchase.
This means, from the get-go, you should be prepared to gather as much information and data as you can, to ensure you can make a rational prudent educated decision as it pertains specifically to you and your household. I recommend you enlist a realtor who has knowledge, skills, experience, and a set of values and beliefs that complement your own, so they can guide and steer you without pressure or hassle. Your realtor is an invaluable resource who can save you time and money, while holding space for the inevitable ups and downs in your quest to find Home.
Ups and downs you say, Steve? Yes. And although perhaps you're extremely level-headed, be prepared to navigate The Psychology Of Real Estate, Housing & Home.
Get Your Mortgage Pre-Approval
The most critical and wise first step in your dwell hunting process is to determine your purchasing power by getting a mortgage pre-approval. Being fully informed and financially qualified - and knowing precisely what your top end of budget is - will allow you to clearly draw the economic limitations by which your purchase is based. After all, there is nothing worse that falling in love with a property that you discover is one dollar more than you can afford, so pre-determining your budget that accounts for all the anticipated costs, will allow you to manage your homeownership expectations affordably.
Furthermore, as we collectively struggle to understand the extent of economic turbulence that has, is and will be caused by COVID-19, it's essential you budget smartly, know your financial reach, and use all the tools at your disposal to ensure the realization of your homeownership dreams. After all, only just last week CMHC implemented new Changes To Mortgage Rules Will Reduce Buying Power Of Canadians.
I always recommend my clients contact a mortgage broker - like the excellent Mortgage Jake - and their lender to secure some financing commitments in advance of your property search. And then prepack some great supplemental tools for handy reference, or information aid during your dwell search. After all, today there's always an App for that, right?
Here are two of them!
Canadian Mortgage App
The Canadian Mortgage App is currently touted as the #1 mortgage app in Canada. What is particularly nice about this tool is that it is designed to help you make impartial financial decisions, as it isn’t linked with any mortgage company or product. It’s useful for homebuyers, realtors, and mortgage brokers alike, offering extensive and up to date information about available rebates, maximum loan amounts, and down payments. And it's available as a free download from the Apple Store or GooglePlay!
This app dives into detail, helping you properly understand the metrics of home ownership costs. Homebuyers can explore various payment, mortgage product, and amortization scenarios, including variations if you were to make extra payments. There are calculators for closing costs, land transfer taxes, moving costs, home inspection costs, and more! Users can also gauge their levels of affordability with a stress test calculator; you can project total monthly expenses for a hypothetical home, helping you accurately budget. It can even facilitate a mortgage application right in the app!
The interface is very user-friendly, which is paramount when such breadth of important information is in the palm of your hand!
CMHC Debt Service Calculator
Another handy online tool that helps you to frame your budget is the CMHC Debt Service Calculator. What is great about this calculator is that it mirrors the criteria that your lender will be using to qualify you for your mortgage (minus other things like credit history and net worth), so you have a pretty solid idea what your house hunting price point should be. It also lets you know what to expect
Lenders calculate your Gross Debt Service (GDS) and Total Debt Service (TDS). Your GDS reflects your monthly housing costs in relation to your income and needs to be equal or lower to 35%; your TDS reflects all of your monthly debt payments plus your housing costs in relation to your income and needs to be equal to or lower than 42%.
This calculator also lets you know what to expect. For example, if your TDS is very high, you may want to increase your down payment or pay down some other debt to build more room in the ratio.
Calm your dwell hunting jitters by arming yourself with as much knowledge as possible. As the saying goes, knowledge is power!
Here are some of my recent informative blogs on mortgages, finance, and Toronto real estate:
May my team and I become your realtors of choice, and guide you to the best of the best Toronto real estate as it meets your wishes, wants and needs?
Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-8000
- we're here to earn your trust, then your business -
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*Love Canadian Housing? Check out Steve's University Student Mentorship site called Houseporn.ca which focuses on architecture, landscape, design, products and real estate in Canada.