Guest contributor: Emmanuela Urbani, Licensed Mortgage Agent
Perhaps you sold your house when you separated/divorced and entered the rental market. Given the prices and competitive state of the real estate market at the moment, the thought of buying your own home can be daunting. Let’s talk a little about getting back into the real estate market.
Getting started
With current housing prices being so high, one of the most important factors to consider when re-entering the real estate market is your down payment. The minimum down payment is 5% of the first 500,000 of the accepted sale price of the house and 10% of the difference. If the property is over 1 million, then a 20% down payment is required. The more you have for a down payment, the more flexibility you will have in finding a mortgage product for your specific situation. If you are worried that your income is not high enough, having 20% down allows you more flexibility in choosing a mortgage option that will be more lenient and accommodating.
Tips on increasing your chances of getting approved
If you will be living alone, you can consider looking for a home with a basement that can be
rented out and/or utilize extra space for home sharing. Rental income can help you qualify, and home-share income can also be used with some financial institutions. The more income we add, the better your file will look.
Approaching retirement?
Perhaps you are close to retirement and are worried about how that will affect your ability to
re-enter the real estate market. You have the amount for down payment and perhaps you have investments as well, but your income in low. Doing a deep dive into your situation will allow us to see if your investments and RRSPs can be leveraged to help you qualify for a mortgage. Many individuals, if they have savings and investments built-up, will first consider cashing them out in order to purchase a property. However, every situation is unique, and it is important to take a look at all aspects in order to determine if cashing out is truly the best option for you.
Down Payment Assistance
What happens if you have some money saved to buy a home but not enough? Maybe when you previously sold your home, you put the money from the sale aside and have not touched it since. However, with the real estate prices these days, what you have put aside may no longer enough for a full down payment. There are programs available that can help you with your down payment. Whether it is a rent-to-own or a straight-up down payment assistance program, these options can help you get into the market and put your money into your own home instead of renting and paying off someone else’s mortgage. These can be great options. Rest assured that to protect my clients, I vet these programs to ensure their reputability and reliability. By carefully examining your mortgage application, an agent such as myself can do the math and help you weigh the pros and cons to utilizing one of these options versus staying in the rental market. With prices what they are today and showing no signs of dropping significantly, these programs can often be beneficial to you.
Some final things to consider
When looking at getting back into the real estate market, there are a few things to keep in
mind. House shopping in smaller towns and investigating properties further from the major
urban centres can absolutely help keep your purchase price lower. Nevertheless, it is important to consider that purchasing in these areas can make it more challenging to get your mortgage request approved. Additionally, it is recommended to work closely with both your realtor and mortgage agent when shopping as each will offer different and important perspectives. With both their inputs, you will have the insight and knowledge necessary to make the best decision for yourself and ensure a successful re-entrance into the real estate market.
If you’re still unsure and would like more information on how to refinance your mortgage, reach out to Emmanuela. She has the experience and know-how to guide you through the available mortgage options and approval process.
