BY: MAURICE ANDERSON
If you have never applied for a mortgage before, the first step you need to do is get pre-approved. The process of meeting with the lender and outlining your income, assets, and liabilities can be an eye-opening experience which will determine how much of a mortgage you can afford. The lender will also ask you about your down-payment money and give you advice about paying for closing costs such a legal fees to complete a sale. Any real estate agent you work with will inquire about what your price range is. The pre-approval process is intended to let you know how much your financial institution or lender is willing to lend you. The lender also usually informs you about the range of the credit score that is required for you to purchase your home or if your bad credit will affect your qualification in getting a mortgage at a reasonable rate. Once you know how much you can borrow and how much the payments will be, you can go back to your budget to see if you really want to spend that much. Knowing how much you can afford to spend will also help you tailor your house hunting efforts.
Remember, you are pre-approved up to a certain amount, not for a certain amount. When you are saving for a new home you are required to have at least a five percent down payment. As a realtor, I usually recommended saving from ten to twenty percent. The more you put down for your down payment the less your monthly mortgage will be. According to the Toronto Real Estate Board, the average price of a GTA home is expected to rise by double digits again this year, hitting a new average of over eight hundred thousand dollars. Prices keep rising because the housing supply is not keeping up with population growth and demand in addition to other factors. Homebuyers increasingly face the choice of living in a high-rise condo or single-family home community. There is a huge opportunity to modernize outdated zoning by-laws to build more homes in existing communities that are connected to transit and local employers. Tim Hudak is calling on the province to establish a task force to examine the issue of home affordability in the GTA. OREA says cutting the red tape around new home construction will help alleviate the problem of a lack of supply in this hot market. Year over year statistics states the average home price in the GTA increased over twenty percent. The price of numerous detached homes in Toronto is now well over one million dollars.
The top reason why foreign buyers from China want to get into the Canadian housing market is education due to the children coming to Canada for post-secondary education. Toronto’s status as the top destination for immigrants and foreign investment in Canadian property all played a role in heating up the market as well as reluctant homeowners listing their homes in a city where existing homes account for the majority of a percent of sales. A large number of adults still living with their parents is another important factor. Some of that comes from social traditions among certain immigrant groups.
For many homeowners who have been on the sidelines for years or even decades watching as homes around their have multiplied in price may now be thinking of selling and buying a new home for themselves or children if they decide to downgrade. They will find that things have changed considerably. Many of the old truths for home buying especially in Vancouver and Toronto are outdated.