Tips for Simultaneously Buying and Selling a Home
Buying a home and selling a home can be two of the most stressful — and expensive — life events. And, they often happen simultaneously! If you’re looking to buy a home while also trying to sell your home, don’t panic. In this post, we’ll go over a few tips to help you tackle the buying and selling sides of the real estate market without becoming overwhelmed. Tips for Buying First You likely can’t buy and sell a home at the exact same time. So, first, you’ll need to figure out whether you want to buy a home or sell your home first — each has its own set of unique advantages and disadvantages. If you decide to buy first, here are some expert tips to follow: Request an Extended Closing We know you’ll be super excited to move into your new home ASAP. But don’t get too far ahead of yourself because it’s typically critical that you sell your home before moving. This is why we recommend requesting an extended 60-day closing to allow you time to get your home ready to list, list it, and give the buyers time to close and be prepared for move-in. Make Your Offer Contingent on the Sale of Your Current Home The last thing you want is to be straddled with two mortgages. You can’t expect to ask for too much in this seller’s market as a buyer. But, making your offer contingent on your current house selling is quite reasonable, and most sellers should be willing to work with you. This contingency will offer you a little protection — and therefore peace of mind — that if your house doesn’t sell for some reason, you won’t be legally bound to your new home. Make Sure Your Home is Ready to Sell There’s so much that goes into getting a home ready to sell — from painting every nook and crevice to deep cleaning and making sure the landscaping would make Martha Stewart green with envy. This is why it’s so important to get started as soon as possible. As soon as you know you’re serious about selling, start a checklist of ‘must-do’s' before you list and get to work! Tips for Selling First If you need to sell your home before you can start looking for a new house, consider these tips: Find Temporary Housing You’ll need somewhere to live once your house sells and you look for a new home, whether that’s with family or friends, at a hotel, or an apartment or rental home. Give yourself at least two months to find accommodations that will suit your family’s needs, and consider a backup plan just in case Plan A falls through. Be Ready To Buy Once your home sells, you’ll want the process of finding a new home to go relatively quickly, especially if you have children in school or a baby on the way. So, get everything in order with the bank ahead of time, including mortgage pre-approval, your budget, and timeline. That way, when the time comes to make an offer to buy a home, you won’t face any delays that could have been avoided and that have the potential to lead to your dream home getting scooped up by someone who is ready. Know What You’re Looking For Today’s real estate market moves fast. So, it’s important to know exactly what you’re looking for in a new home. Start a list of must-haves, including location and school system, number of bedrooms, and any amenities you’re looking for. Give the list to your Realtor so they can keep their eyes out for listings that are coming up, and once you accept an offer on your current home, you can get to work finding exactly what you’re looking for.
Is My Window to Buy a Home Finally Opening?
The housing market was red hot for months. Mortgage rates were low, and the competition for homes was fierce, with many people paying far above the asking price. Buyers were snapping up homes within hours of being listed, leaving many frustrated in their search. Usually, low-interest rates signal that it’s prime time to buy, but in 2021, the rates exacerbated the intense competition, and other factors made the housing market tough, particularly for millennial buyers. Many in this group have been waiting to purchase their own home for years, only to be delayed by factors such as savings, low housing inventory, and COVID. Some of these buyers may find relief in the current changing market conditions. Rising interest rates, a larger level of inventory, and a slower sales pace mean that this summer may be a good time to finally buy. Interest Rates Mortgage interest rates were quite low over the past two years, meaning buyers who could close on a house saved a significant amount of money, both in monthly mortgage payments and over the length of the loan. These low rates led to the incredibly competitive rush to buy that occurred in 2020 and 2021. But since the last quarter of 2021, mortgage rates have risen quickly. In May 2022, the average rate for a 25-year, fixed-rate mortgage was 3.89%. For the two previous years, that rate was around 2.75%. Today, that rate is 4.99%. Rising interest rates may discourage some buyers, but in reality, the rates are still historically low. And the fact that the rates are turning off some prospective buyers means those in the market to buy have a better chance of securing the homes they really want. Home Inventory In the last two years of this sizzling hot real estate market, the low housing inventory made purchasing a home difficult for many prospective buyers. More people could afford to buy due to the low rates, but finding a home and winning the bidding war for it was quite difficult. Many listed homes received multiple offers in a matter of minutes. It’s been a clear seller’s market. They had most of the power and were able to set conditions that were favourable to them. Potential buyers were routinely offering amounts way above the asking price, which made it impossible for those on a stricter budget to put in winning offers. Fortunately, home inventory is slowly rising, so more potential buyers will be able to find the homes that they want and actually close on them. You shouldn't have to make a snap decision about making an offer or outbid four other anxious buyers either. Terms & Conditions Finally buyers can negotiate better terms and conditions into their offers and agreements. Conditions like financing approval, home inspections and even make the offer condition on the sale of their current home. Things that were unheard of the last couple years or at the very least, ineffective in helping you win a bidding war. Sellers are more flexible on things like closing dates, inclusions and warranties. All of these things add up to a much more favourable position for home buyers and thus, make it a much better environment to buy a home in. How long this will last is anyones guess but waiting too long will most certainly see the tides change. Price Cuts Since experts agree that the housing market is slowing down, you can expect to see some price cuts in homes rather than rapidly increasing prices. In 2021, home prices rose sharply and by the peak home sellers were averaging 115% of asking price. It was a strong seller’s market, and buyers had to pay the price if they wanted to secure a home. Since interest rates and home inventory are now rising, sellers are losing some of their power. In fact, by the end of December 2022 home sales in Simcoe County were coming in on average at 94-96% of the asking price. In some cases selling at 90% of the original asking price as sellers struggle to find the balance of getting the most money they can for their home and actually sell it. From the peak to now there has been approximately a 25% correction in the average sale price. Is it now a buyer’s market? Not exactly. Technically it is a balanced market. Prices are still high in some cases, and the situation remains competitive on homes that show well and represent good value. But for buyers who have been edged out of the market for years, now may be a good time to re-enter the market and try to purchase your own home.
Never Leave Money on the Table: Get a Lower Mortgage Rate in Canada
As of late December 2022, the average rate for a 5-year fixed mortgage is 5.70%. Compared to July 2021, the typical fixed rate has risen by 150%. What factors affect mortgage rates? Mortgage rates are affected by current economic conditions. And not just in Canada. Changes in the global economy regularly affect mortgage rates as well. Following the pandemic, the Bank of Canada has raised interest rates to combat inflation. As interest rates rise, lenders are forced to increase their own mortgage rates to protect their profits. The Bank of Canada also sets a prime lending rate, which banks use as a basis for their variable mortgages. The current prime rate is 6.45% – a 2.45% increase from the beginning of 2022. What options do home buyers have? For many, securing a lower mortgage rate can mean the difference between an affordable monthly housing payment and one that’s out of reach. Fortunately, there are several strategies you can use to reduce your mortgage costs and save money in the long run. Let’s break down some options: Shop around Comparison shopping is one of the most reliable ways to lower your mortgage interest rate, but a survey by HSBC shows that only 50% of Canadians have done it. Shopping around on rate comparison sites like Ratehub.ca and WOWO.ca are good places to start. After doing some research about the best rates, you should then get quotes from multiple lenders. How much will you save? Potentially thousands, according to an assessment by Ratehub.ca. Get a mortgage pre-approval and rate hold When you’re pre-approved for a mortgage, the interest rate you’ve been approved for can be locked in for a certain number of days. This means that your rate will stay the same even if interest rates go up. Depending on the lender, you can get your rate locked in for up to 130 days. During a period of rising rates, as we saw in 2022, a rate hold for the average Canadian mortgage could save you approximately $25k. Plan ahead and work on your credit score If you aren't planning to sign a contract in the next month, take this time to focus on boosting your credit score. Many home buyers are able to improve their scores with minor changes to their finances, and improving your score has a direct impact on your mortgage rate. There are online tools like Credit Karma and Credit Sesame that can help as well. Some strategies for increasing your score include: Reducing your balance on any credit cards and aiming to use less than 30% of your limit on any card. Asking for higher credit limits. Having a higher limit with the same balance will lower your overall credit usage rate, which can help improve your credit score. Making payments on time. Overdue payments can damage your credit score, so make at least the minimum payment even if you can’t pay the full amount. Noticing errors. Challenging mistakes on your credit report can help you quickly improve your credit score. Access savings through special home buyer programs If you’re a first-time home buyer, you may be eligible for government programs to help offset the costs of buying a home. These programs may not directly impact your mortgage rate, but they will help you save money in the long run. The First-Time Home Buyer Incentive is a federal program to assist first-time home buyers with their down payment. The government will contribute 5-10% of your home’s purchase price to put towards a down payment. The higher your down payment, the quicker you can pay off your mortgage, meaning less interest you’ll have to pay. Many provinces and municipalities also have grants, tax credits, and incentives for first-time home buyers. Check out National Bank’s list of provincial incentives. Which option is best for you? Though many strategies are available for lowering your mortgage rate, it’s wise to discuss your needs with an experienced real estate agent and lender early in the process so they can identify the best options for your financial situation. Additionally, by taking steps to improve your credit score, shopping around for lenders offering competitive rates, and looking into options such as discount points, you can increase your chances of getting a better deal on your mortgage. Taking advantage of these tips could save you thousands over the life of your loan. Eager to move forward? If you're uncertain which direction to take or have questions about your individual needs, our team of knowledgeable real estate agents is ready to help. We can answer your questions, and we'll support you through the entire homebuying process.
Categories
Recent Posts
