Kamloops Real Estate BlogRecently posted or modified blog posts in the category - Buying a Homehttps://www.mykamloopslistings.com/blog/Copyright MyKamloopsListings.com2023-05-08T16:42:56-07:00tag:mykamloopslistings.com,2012-09-20:17947How to Become a Homeowner on a First-Time Buyer's BudgetHow to Become a Homeowner on a First-Time Buyer’s Budget
It's not easy being a first-time home buyer right now. At the end of last year, housing affordability hit an all-time low.1 Additionally, mortgage rates have risen significantly since 2021, while inventory remains tight for many property categories, but especially for starter homes. Even lower-priced condos are harder to snag these days, as investors and downsizers muscle out first-timers by offering stronger, often cash-heavy bids.2
As a result, many first-time home buyers are finding that they need to get creative to afford a home or risk renting for longer than they planned. If you, too, are struggling to afford homeownership, here are some workarounds to consider as you plot your first home purchase.
1. Try House Hacking
“House hacking” is a real estate investment strategy in which participants use their homes to generate income in order to offset their expenditures.
For example, renting out a basement apartment or accessory dwelling unit (ADU)—such as a detached garage that's been outfitted with a washroom and small kitchen—counts as house hacking. So does splitting housing costs with a roommate or converting a part of your home into an Airbnb.
House hacking isn’t new. But, it’s grown in popularity as a new crop of digital platforms has entered the market and made it easier than ever for homeowners to generate income from their property.
In some cases, house hacking may make it possible for you to qualify for and afford your first home. A lender, for example, may approve you for a larger mortgage if you purchase a home with immediate income potential, such as a legal duplex or a property with a secondary suite that has a kitchen and full washroom.3
In addition, house hacking could help you pay your mortgage once you move in. Here are just a few of the ways you could use your home to earn some extra cash if your neighbourhood or municipality allows it:
Offer paid parking in your driveway on a site like CurbFlip or SpotHero.
Rent out your swimming pool for a few hours on Swimply.
Make your home available for photoshoots or events on Giggster or Peerspace.
Turn your backyard into a pay-by-the-hour dog park on Sniffspot.
List your garage space on Kijiji.
But before you make plans to house hack, make sure you fully understand an area's bylaws and homeowner restrictions. We can help you find a property with income potential in a neighbourhood with more flexible rules or less restrictive zoning.
2. Team Up With Friends or Family
If you aren't wild about the idea of welcoming strangers to your home, you may want to consider co-purchasing with a friend or family member instead. This unconventional housing arrangement is also growing more popular as friends and family members cope with higher living costs by pooling resources.
According to Statistics Canada, multigenerational households in Canada have nearly doubled since 2001. Meanwhile, the number of households shared by roommates has grown even more rapidly, climbing by more than 50% during the same period.4
Arrangements can be customized to fit your circumstances. For example, you could purchase a home and then rent a portion of it to a loved one. Or you might consider co-buying a home with friends or family members so that you can step onto the property ladder and start building equity together.
Co-ownership could work out especially well for you long-term if it helps you to buy a home that's bigger, has more investment potential, or is located in a high-demand area and so appreciates at a faster rate. Plus, you'll get to see your loved ones more often and enjoy the coziness of shared living with people you like having around.
On the other hand, sharing a big financial responsibility, like a mortgage, with friends or family could get messy—especially if you don't create a clear-cut co-ownership agreement beforehand that outlines your mutual expectations. So plan carefully before you proceed.
In addition, you may need to rethink the type of home you pursue. For example, a smaller home might be cheaper, but do you really want that much togetherness all the time? We can help you set priorities and search for a suitable property.
3. Tap Your Network for Help With Funding
Another established method for affording a first home is to lean on family or friends for financial help. Getting assistance with the down payment or other borrowing costs can go a long way toward making your homeownership dreams come true.
As long as you don't mind asking for help, a free-and-clear gift that's intended for your down payment is an ideal arrangement, since it will allow you to borrow less overall. Or, if that’s too big an ask, your loved ones could pitch in toward closing or moving costs.
Alternatively, your loved ones could help by co-signing your loan. For example, if their credit score is a lot higher than yours, it could enable you to secure a lower interest rate so that your monthly payment is more affordable.
You certainly wouldn't be the only one leaning on family to help afford a home at today's prices. According to the Canada Mortgage and Housing Corporation's latest Mortgage Consumer Survey, around a third of recent home buyers used gift money to help buy their homes. What's more, 22% admitted that they wouldn't have been able to afford to buy without it.5 Meanwhile, a CIBC study from 2021 found that many parents are gifting increasingly large amounts to their children to help fund down payments.6
Just be sure your parents or other generous loved ones are aware they're giving a gift, not a loan, and are willing to put that in writing. A lender will want proof that this money isn't adding to your debt burden and may require documentation from your benefactors.
Another way to tap your network for help is to crowdfund part of your down payment or ask for monetary gifts instead of tangible ones. For example, if you're getting married soon, you could skip the wedding gift registry and ask guests to contribute funds to your hoped-for home purchase instead.
4. Look for Special Programs and Assistance
You could also cut some of your upfront mortgage costs by taking advantage of government programs, tax rebates, and other funding opportunities.
For example, the Government of Canada's new First Home Savings Account (FHSA) initiative could help you trim your next year's tax bill as you gather money for your down payment. When you open an FSHA, you can route up to $8,000 per year of income to the account, tax-free (up to a maximum of $40,000).7 And if you co-buy with a partner and you both open FHSA accounts, you can squirrel away a combined $16,000 per year.
You may also be eligible for a First Time Home Buyers' Tax Credit up to $1,500, as well as other home buyer rebates, depending on the type of home you buy and where you move. For example, you could get a substantial rebate on some of the GST/HST taxes you pay when you buy a newly-constructed or heavily-renovated home.7
First-time home buyers can also borrow up to $35,000 tax-free from their individual Registered Retirement Savings Plans (RRSPs) to help beef up their down payments.7 And eligible buyers can take advantage of the Government of Canada's First-Time Home Buyer's Incentive, which offers 5% to 10% of a new home's purchase price in exchange for a cut of the home's equity.8 We can connect you with a lender or mortgage broker who can educate you about your options and help shepherd you through the process.
5. Expand Your Home Search
If you’re having trouble finding a home within your budget, consider broadening your search criteria. You may be surprised by the kinds of deals that are available when you're willing to compromise.
For example, if you're struggling to find an affordable home in your target neighbourhood, expand your search area and consider homes that are further out of town or that are located in up-and-coming areas with lower starting prices. We would be happy to introduce you to some great but lesser-known neighbourhoods that we consider hidden gems.
You could also save money on your home purchase simply by dropping or revising some of your must-haves and settling for OK-to-haves instead. For example, do you really need two washrooms and a large backyard? Or could you settle for a single washroom with space to add a second one in the future? And would a small garden, cozy balcony, or rooftop terrace still give you the outdoor time you crave? These types of compromises can sometimes shave tens of thousands off your purchase price.
Similarly, if you don't mind rolling up your sleeves or working with a contractor on minor jobs, you can look for homes that need a little TLC. Just because a house looks dated doesn't mean it's destined to stay that way or that it will take a ton of money to spruce up. In fact, a home with good bones but cosmetic flaws could be a perfect match: With less competition, you'll have a better chance of purchasing the home at an affordable price. You can then take your time to save more and fix it up to your taste.
Keep in mind, starter homes are rarely forever homes, but merely a first step onto the property ladder. By gaining a foothold in the real estate market now, you can set yourself up to afford a more expensive property in the future.
According to Statistics Canada, the net worth of a typical Canadian homeowner has more than doubled since the start of the new millennium, climbing from $323,700 in 1999 to $685,400 by 2019. The average renter's net worth, by contrast, grew far more slowly during the same period, rising from $14,600 to just $24,000.9 We can help you find an affordable first home so you can start building equity to reach your long-term financial and real estate goals.
YOU CAN DO IT—AND WE CAN HELP
Buying a first home is challenging, but it's not impossible—especially when you have a savvy real estate professional in your corner. We will work with you to devise a plan to overcome your financial constraints. Then, we’ll help you find a home that not only excites you but also fits your budget and lifestyle. Give us a call to get started with a free exploratory consultation.
The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.
Sources:
Financial Post - <a href="https://financialpost.com/executive/executive-summary/housing-affordability-crisis-canada-worse">https://financialpost.com/executive/executive-summary/housing-affordability-crisis-canada-worse</a>
CBC - <br /> <a href="https://www.cbc.ca/news/canada/british-columbia/housing-investors-canada-bc-1.6743083">https://www.cbc.ca/news/canada/british-columbia/housing-investors-canada-bc-1.6743083</a>
MoneySense - <a href="https://www.moneysense.ca/spend/real-estate/income-properties/legal-secondary-suite-or-basement-apartment/">https://www.moneysense.ca/spend/real-estate/income-properties/legal-secondary-suite-or-basement-apartment/</a>
Statistics Canada -<br /> <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220713/dq220713a-eng.htm">https://www150.statcan.gc.ca/n1/daily-quotidien/220713/dq220713a-eng.htm</a>
Canada Mortgage and Housing Corporation (CMHC) - <a href="https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-research/surveys/mortgage-consumer-surveys/survey-results-2022">https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-research/surveys/mortgage-consumer-surveys/survey-results-2022</a>
CIBC - <br /> <a href="https://economics.cibccm.com/cds?flag=E&id=9dc124d8-9764-4c1d-83b4-9e89a5d568b8">https://economics.cibccm.com/cds?flag=E&id=9dc124d8-9764-4c1d-83b4-9e89a5d568b8</a>
Government of Canada - <br /> <a href="https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html">https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html</a>
A Place to Call Home - <br /> <a href="https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive">https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive</a>
Statistics Canada - <br /> <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm">https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm</a>
2023-05-02T10:23:39-07:002023-05-08T16:42:56-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:12214Getting Family Members on the Same PageRemember the last time you had a family discussion about what to have for dinner? Chances are, there were some disagreements! In fact, it might have been agonizing trying to get everyone to settle on the same dish. Now imagine getting everyone to agree on what type of home to buy!
Obviously, you want family members to be in harmony when looking for a new home. The more everyone is on the same page, the smoother the process will be.
Here are some tips worth trying:
Make a list. Have everyone list the top three features they want in a new home. You might find that family members are closer to agreement than you thought. Also, family members will likely not be disappointed if they get two out of the three features they want.
Have a family meeting. Set a goal to have a clear profile of the kind of home you want by the end of the meeting. Be prepared for some lively discussion, but also be firm that a decision needs to be made.
Be understanding. If a family member insists on a particular feature, ask why. It might be trivial, such as having a shopping mall within walking distance when driving or taking transit is relatively easy. On the other hand, the desired feature might be something truly important and worth considering.
Manage expectations. Explain that not everyone will get what they want and that you (or you and your significant other) will do your best to accommodate everyone’s wishes.
There’s no perfect solution. Depending on your family, it might be difficult to make sure everyone is happy with the home you end up buying. However, by using these tips you can ensure that everyone will at least feel they’ve been heard. Then, once you start building memories in your new place, everyone will start to feel like it’s home!
Obviously, you want family members to be in harmony when looking for a new home. The more everyone is on the same page, the smoother the process will be.
Here are some tips worth trying:
Make a list. Have everyone list the top three features they want in a new home. You might find that family members are closer to agreement than you thought. Also, family members will likely not be disappointed if they get two out of the three features they want.
Have a family meeting. Set a goal to have a clear profile of the kind of home you want by the end of the meeting. Be prepared for some lively discussion, but also be firm that a decision needs to be made.
Be understanding. If a family member insists on a particular feature, ask why. It might be trivial, such as having a shopping mall within walking distance when driving or taking transit is relatively easy. On the other hand, the desired feature might be something truly important and worth considering.
Manage expectations. Explain that not everyone will get what they want and that you (or you and your significant other) will do your best to accommodate everyone’s wishes.
There’s no perfect solution. Depending on your family, it might be difficult to make sure everyone is happy with the home you end up buying. However, by using these tips you can ensure that everyone will at least feel they’ve been heard. Then, once you start building memories in your new place, everyone will start to feel like it’s home!
2021-11-25T11:00:00-07:002021-11-08T12:24:37-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:12216How to Tell if a Neighbourhood is ImprovingWhen you’re looking for a new home, you want to find one in a great neighbourhood – or, at least, in a neighbourhood that is on the upswing. How can you tell if a particular area is improving? Here are some common indicators:
Pride of ownership. Take a walk around the neighbourhood. Do you get a sense that people take good care of their homes? Are the lawns mowed? Is the landscaping trimmed? Are flowers planted? Homeowners are more likely to look after their properties when they like where they are living.
Real estate sales activity. Do homes tend to sell quickly in the area? Do they sell for a good price? If so, the neighbourhood is probably in demand. If people want to live there, it’s a desirable area.
Business investment. Are businesses investing in the surrounding area? Is there an increase in the number of upscale shops, health clubs, restaurants, and other commercial enterprises that often locate near desirable neighbourhoods?
City plans. Find out what plans the city has for the area. Will there be road improvements done in the near future? Are there any major construction projects on the schedule, such as a new school or community centre? Although such projects can be disruptive in the short term, they may improve the neighbourhood – and, as a result, boost the value of any home you buy – in the long-term.
If you need help finding this information, call today.2021-11-18T11:00:00-07:002021-11-08T12:25:02-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:12154Questions to Ask When Buying a Fixer-UpperIf you’re thinking of selling your home and buying a new property, you might come across an opportunity to purchase a “fixer upper”. In fact, the home might be priced based on its need for work.
Should you buy that “fixer upper”? That can be a tough decision. Here are some questions you should consider:
What repairs need to be done?
Are there any major items that will need to be replaced soon, such as the furnace?
What renovations are needed? How much, realistically, are those going to cost?
How much of the work can you do yourself?
How long will it take for the improvements to get done? (How long will you need to live with drywall dust?)
How does the price of a comparable “move in ready” property compare to this one?
Of course, before considering purchasing any property – especially one that needs work – you should get a professional home inspection. It will uncover any issues you can’t catch during a viewing. Ultimately, you’ll have to weigh the pros and cons before buying a fixer upper.
If you'd like to chat more about the pros and cons, or need a recommendation on who to call for that home inspection, give me a call or get in touch using the form below and I can help get you on your way to finding your dream home!2021-10-21T09:00:00-07:002021-10-20T14:14:24-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:12117Conquering the Fear of Paying too Much for a HomeYou’ve heard of “buyer’s regret”. It refers to purchasing a pricey item, like a fancy sweater or a new car, and then regretting it the next day because you think you paid too much.
Fear of buyer’s regret can actually dissuade people from making a purchase, even when the price is right and they really want the product!
In the real estate world, buyers can sometimes hesitate to make an offer on a home for the same reason. They worry about paying too much, so they take a pass on the property. That’s unfortunate because they may miss out on a great home at a good price!
How do you conquer this fear?
The first step is to get your finances in order. Determine how much your current property will likely sell for on today’s market. Also, talk to a lender or mortgage advisor to find out how much of a mortgage you can get. This will give you a fairly good idea of what you can comfortably afford.
Don’t forget to factor in monthly expenses when determining affordability. If you’re looking to move to a larger home, or one that’s in a highly desirable neighbourhood, your mortgage payments may be higher. Other expenses, like utilities, might increase too.
Remember, a new home is as much a lifestyle investment as it is a traditional financial one. You’re making an investment in your – and your family’s – happiness. That might even make it worth spending a bit more. And, once you’ve reviewed your finances and anticipated your expenses, you may discover you can do just that!
So, take all these factors into account and determine a price range within which you can comfortably shop. That will make it easier to make an offer on that perfect property with confidence, and with no fears of regret.
Still feeling unsure or have questions? Give me a call and I'll happily put you in touch with a mortgage broker that will be able to help you along the way!2021-10-07T09:00:00-07:002021-10-05T15:54:24-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:11698Why It’s Important To Put Insurance at the Top of Your To-Do ListIf you search “What should I consider first when buying a house?” you’ll find results explaining things like location, purchase price and mortgages. What you won’t find are recommendations on homeowners insurance. The part that also isn’t mentioned is that, in order to qualify for your mortgage, insurance is a necessity.
Although homeowners insurance is often one of the last things prospective homeowners consider, it is by far one of the most important pieces of the puzzle and should be considered long before the completion of any purchase. This is especially important in British Columbia during the summer months.
What may not be commonly known is that one of the conditions for approval of homeowners insurance is that there cannot be an active forest fire within 25km of the home. With British Columbia’s fire season averaging over 1200 hundred fires per year in the last 3 years, covering hundreds of thousands of hectares and costing the province hundreds of millions in damages, buyers (who will be applying for mortgages) need to consider any active wildfires. And if there aren’t any at the time of offer, consider that there very well may be prior to the completion of the purchase.
Once you’ve made an offer on the home of your dreams and that offer has been accepted, reach out to your insurance broker of choice to get the ball rolling on securing (binding) your policy. They will be able to bind your policy for you up to 30 days prior to your completion date. This means that even in the unfortunate event of a wildfire beginning after your offer is accepted, you will have an agreement in place and will be able to move ahead with your purchase.2021-07-20T14:00:00-07:002021-07-20T13:57:18-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:5877Will Increasing Mortgage Rates Impact Home Prices?<img src="https://assets.site-static.com/userfiles/1849/image/mortgage-rate-projections.jpg" alt="Will Increasing Mortgage Rates Impact Home Prices? " title="Will Increasing Mortgage Rates Impact Home Prices? " height="410" width="750" />
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting found mortgage rates have very little impact on the cost of the home. The housing market and price increases are affected by things like job growth in the area and rising wages. Coincidentally, these same factors are causing the rise in the mortgage rates since people can afford to take out more.
Bottom Line
As the economy progresses and strengthens, mortgage rates and home prices will fluctuate. It is a misconception as rates increase, home prices will decrease. Advances in the economy have shown that rates and home prices are more likely to increase together.2020-01-13T10:34:00-07:002020-01-13T10:36:06-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:5878Common Things to Look Out for Before Buying Your Dream Home<img src="https://assets.site-static.com/userfiles/1849/image/3-questions-to-ask-before-buying-your-dream-home.jpg" alt="Common Things to Look Out for Before Buying Your Dream Home" title="Common Things to Look Out for Before Buying Your Dream Home" height="410" width="750" />
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage rates are increasing. If you are looking to purchase a home but want to stay within a budget, it may be in your best interest to move quickly. It is forecasted for these trends to continue in an upward motion, causing home values to continue to increase.
3. What About Current Mortgage Rates?
The ticket price is not the only thing you should be concerned with when purchasing a home. Mortgage rates are always changing and can have a huge impact on your monthly payments. Current trends show mortgage rates are rising. This is something to consider if you are debating the right time to purchase a home, since the rates may be even higher down the road.
Bottom Line
You and your family are the only ones who can determine the right time to purchase your dream home. It is important to decide exactly why you want a new home for your family and decide on a budget that will be comfortable moving forward. This budget may affect the amount of time you have to search for a home, since home prices and mortgage rates are increasing. 2020-01-13T10:34:00-07:002020-01-13T10:36:09-07:00Terry Lyndstag:mykamloopslistings.com,2012-09-20:5880Is Getting a Home Mortgage Still Too Difficult?<img src="https://assets.site-static.com/userfiles/1849/image/getting-a-home-mortgage.jpg" alt="Is Getting a Home Mortgage Still Too Difficult?" title="Is Getting a Home Mortgage Still Too Difficult?" height="410" width="750" />
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the Economy
The housing market is recovering at a slower pace than it should since less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs. Bottom Line
After the housing market boom and bust, mortgage lenders became stricter in their lending standards. It is not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. Stay on top of your credit and make sure you and anyone else who is applying are in a good financial position so you can be approved for a loan. It is important to research different companies and their requirements to ensure success in getting a mortgage.2020-01-13T10:34:00-07:002020-01-13T10:36:02-07:00Terry Lynds