The sale activities in Toronto real estate market during the pandemic is somewhat surprising. Also, low-interest rates can be fascinating to get a mortgage, especially for first-time buyers. But the more competitive the market, the fewer deals you get.
Since buying a home is probably your most important investment, it is critical to do your research to minimize its challenges. So don’t hesitate to ask all the questions you have in mind. You have the right to step in this process well-informed.
Here, we try to answer some of the most frequently asked questions of home buyers to help you make a better decision.
1. Which is better: buy or continue to rent?
Certainly, buying a home has many advantages rather than renting, including financial gains, tax breaks, capital gains, security, and freedom. But sometimes maybe renting can also be a better option. It completely depends on your personal situation to know whether IS IT BETTER TO BUY OR TO RENT. Considering the incredible low interest rates, maybe now it is better to pay a mortgage than paying rent.
Another important issue, in case you’re buying, is how long you want to stay in this new home. If you are planning to stay just for a year or two, then renting might be a better option for you. Besides, remember that owning a house has subsequent responsibilities like maintenance. So, are you ready for additional responsibilities right now?
2. how to know that i am financially ready to buy a house?
Before you make the final decision, you must evaluate all the factors to see whether it is a good time to buy a house. If you have had a steady job with reliable income for the last 2 or 3 years, you just need to assess if you can pay for mortgage, taxes, utilities, and insurance. A little saving for down payment would be necessary.
You can also use the help of a top Toronto real estate agent for an assessment about your options. They are completely aware of all the costs and expenses of buying a house.
3. How important is my credit score?
The credit score is a summary of your credit history. Mortgage lenders decide on whether you can receive the loans with what interest rate based on your credit score. Having a higher credit score means you will have a good chance for receiving a loan with a proper interest rate. The lower the credit score, the harder it will be to get a loan.
4. What is the difference between pre-approved and pre-qualified?
Pre-qualification is an estimation of how much you may be able to borrow from the financial institution. But pre-approval is the agreement of a financial institution to lend you based on a complete evaluation of your financial status.
So, if you are going to buy a house, your first step is to get pre-approved for a loan (unless you want to pay in cash). Pre-approve can help you to know the approximate price you need looking for in listings. Therefore, you exactly know how much you can afford. This will save your time and energy.
It is much recommended to talk to a bank before buying a house especially for first-time buyers. In addition to being aware of your credit score and affordability, you can also use the bank’s program for first-time buyers. When you talk to your bank or a professional real estate agent, they will help you to better understand the meaning of down payment, escrows and prepaid items.
5. Should I buy another house before selling my current home?
The decision to buy or sell first depends on your own circumstances. The major risk of selling your current home first is the probability of having no place to live for a while. Because it is unpredictable how long it exactly takes to finish the buying process. It is different for each house. It will be so challenging if your current home does not sell in a timely manner. So, if you can afford to buy the new house first, it will surely reduce the stress and pressure.
Nobody can exactly tell you how many days it will take to sell your current house. So, if you can’t afford to buy a new house without selling your current home, you can use the “rent-back” option or bridge financing. A “rent-back” means you can negotiate with the buyer of your current house for additional time to stay until you find a new home. Remember in this case, you should pay the buyer’s mortgage depending on the number of additional days you stay.
6. What is down payment? And how much should I pay for it?
The most important obstacle for first-time buyers is saving for the down payment. You should expect to pay 5% to 20% for a down payment. It generally depends on the condition of your loan and the lender’s requirements. We recommend you to set a budget plan and stick with it until you have enough savings. This may seem hard or a long-term obligation, but remember sometimes you should sacrifice for your future plans.
7. Does it really need to hire a real estate agent?
The answer is: certainly yes. Sometimes the whole buying process can be very complicated. Besides, there are many terms and procedures which you may not even be aware of. So, it is highly recommended to hire a professional real estate agent who has the required knowledge and experience.
Your homework is before choosing your agent, do a complete research and search about how to choose a real estate agent. Make sure you properly interview the future agent and find the best one. We don’t say it is impossible to do it yourself. But doing all the negotiations, inspections and contracts can be overwhelming for those who are not familiar with this process.
Read More : Buying Condo vs. House in Toronto in 2021
8. How many homes should I look at to find the best one?
We can’t say a precise number of homes to look at. There are no general rules about this. You may find the first house very interesting and suitable for you. On the other hand, you might not find your desirable house after looking at more than 20 homes.
Don’t put any limitation on the exact number of houses to look at for finding the perfect one. Generally, home buyers start their search online. So it is possible that you see more than 100 homes online. But you finally pick about 10 homes to go and see in person before you write the offer.
9. Which neighborhood is better?
Surely, your real estate agent is the best person who can answer this question. Because they normally can provide you with all the detailed information about the neighborhood until you finally choose the right one.
Every person has some personal factors in mind for choosing a neighborhood to live in Toronto. More general factors you should consider when you buy a house include the crime statistics, taxes, local amenities and schools if you have children. A REALTORⓇ is not only well-informed about the real estate market, but also has comprehensive updated information about the neighborhood.
Undoubtedly, for those families who have children, schools are one of the most important factors. You can check Toronto’s best schools in the area online by yourself. Or again ask your real estate agent who perfectly knows the neighborhood.
10. What are the important things to check in the house?
One of the most important issues mentioned by many buyers was checking the age of specific items. Certainly mechanical items are the most common ones to check their age. Remember to check every important part like the roof, water heater, and air conditioning. Of course the age of the roof is a kind of information that only the current owner knows. So don’t hesitate to ask!
You should also check the utility bills. Because these will be your regular additional costs in addition to the mortgage payment. You can either ask the owner to show you the bills or obtain it from the local utility company. This may give you a general image of the average costs you should consider in near future.
Before starting the process of buying a new house, get properly prepared and educated about all the challenges you may encounter. Use the help of a professional real estate agent and ask all your questions. It is not embarrassing to ask what you need to know, especially when the information is going to help you in your biggest investment.