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How Do I Buy A Home

By
Real Estate Broker/Owner with Hants Realty Limited NSREC#1739

How Do I Buy A Home

 
    Well spring is here and there's lots on the news about the housing market. Vancouver and Toronto areas are dealing with increasing values and government intervention trying to cool down what they perceive be over heated housing markets. Time will tell as to how that will work. 
    The good news for home buyers here in Nova Scotia is that our market in most areas is the exact opposite of Vancouver and Toronto with slow demand lots of inventory and motivated home sellers making it a great time to buy a house. In Vancouver and Toronto we are witnessing the strongest seller's market with house's selling over the asking price. The term "Seller's Market" simply means the market favours home sellers not buyers. Here in the east coast we have the opposite with downward pressure on prices and limited demand and a strong buyers market. The term "Buyers Market" simply means the market favours home buyers not home sellers.
     This huge disparity geographically in housing markets across the country has always been the case depending on the various local economies but this is probably the worst I have seen in my 42 years working in the industry. While National lending policies coming out of Ottawa designed to slow demand in over heated markets have basically stalled or certainly put the brakes on smaller regional and provincial housing markets as tighter and tighter credit rules have reduced an already limited pool of home buyers even more.
     It can get very confusing as the national news focuses on these overheated markets and national surveys paint an image that doesn't reflect your local market. The thing to remember is that real estate markets are always local and a reflection of your local economy. Much of the local housing market depends on local employment and purchasing power. Purchasing power is a balance between having enough income to service mortgage debt and the availability of mortgage money. Tighter credit policies reduce the availability of mortgage money and the number of qualified home buyers. Housing is a huge contributor to any local economy as new construction and development creates jobs and local tax revenue for government. Resale housing creates revenue to law firms, Realtors(TM) trades people,municipal deed transfer tax and more. I have a saying money is like rain and you have to be where the rain is falling. I have watched as our different levels of government seem to run around with an umbrella stopping the rain. Hard to fathom the reasoning behind it sometimes and the consequences normally leads to less and less productivity as we all try to adjust and adapt.
     No matter what here in our part of the world it is a great time to buy a home. There's lots of inventory, prices are great and interest rates are low so everything is in place to benefit home buyers. Recent credit tightening has made it a little more difficult to qualify for a mortgage and the new stress test means you won't qualify to buy as much home as you can afford. The difference amounts to about $39,000 less but it also means you aren't as exposed to the hit you could face renewing at a higher rate.
    A $200,000 mortgage right now at 2.89% for a 25 year mortgage would cost you $935.24 per month.(Principle and interest) If property taxes were $2400 per year you would add $200 per month for a total payment of $1135.24 per month (Principle, Interest and Taxes) In our area most are paying more than that for rent. With the new stress test you would have to qualify at around $1318.09 (Principle Interest and Taxes) Most lenders allow you to spend 40% of your gross income in total debt payments. This means if your car payment and credit card payments were around $600 per month you would need an income of around $60,000 per year to qualify for that $200,000 mortgage. Of course each couple/individual would vary by income and debt load. In most cases to qualify for the best rate you should have a credit score over 650.
    You do not want a third party to check your credit until you are in a position to qualify. (Each credit check lowers your score.) The good news is you can check your own score and credit history here www.creditkarma.ca with out hurting your score or any cost the site is free to use. This way you can check your score and if there are any issues work towards getting your score above 650 so you can qualify. Once you register you can track your progress anytime for free.
     CMHC has a great mortgage calculater where you can calculate your mortgage payments based on the amount, interest rate and amortisation period . (The number of years usually 25 years)  Note: The term is the length of time the interest rate is locked in for (Normally 5 years for first time buyers) Here's a link to the site.
    Now you are able to work towards getting approved for a mortgage. Once you are ready to start looking find a good Realtor (TM) to represent you as a buyers agent. If you have any questions or would like me to help you please feel free to call, text or email.
Larry Matthews Hants Realty Limited Cell (902)483-0754 email larry@easthants.com
 
Now's the time to buy your first home.
 
How Do I Buy A Home ?   Call Larry

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