BuyingSelling March 1, 2023

Buyers and Sellers Most Asked Questions: Answered



Home purchasing is probably the most significant financial and emotional investment you’ll make in your lifetime. Sure, it’s exciting, but it can also be overwhelming. But don’t worry, because asking the right real estate questions and getting answers from a trusted team of professionals can put your mind at ease. 


Where Do I Start?


Start with getting pre-approval for a mortgage. When it comes to getting pre-approved for a mortgage, there are several benefits that cannot be overstated. Firstly, a pre-approval gives you a clear understanding of how much house you can afford. Armed with this knowledge, you can focus your search on properties that are within your budget and save time looking at ones out of reach. A pre-approval shows sellers that you are a serious buyer and can lead to better mortgage rates. 


Is There a Best Time of the Year Price-wise to Buy a Home?


There is no best time of the year to buy a house per se. Seasonal fluctuations play a role. The overall state of the housing market is the most significant factor. Interest rates and economic conditions can also impact home prices. As your agent, I’ll provide you with up-to-date information on local market conditions and guide you through the home-buying process to help you make an informed decision that best meets your needs and budget.


Can I Buy a Home with No Down Payment?


It may be challenging to buy a home with no down payment, but there are options available that can help reduce the amount of the down payment required. The Canadian government offers the First-Time Home Buyer Incentive program that can help eligible first-time home buyers finance a portion of their purchase through a shared equity mortgage with the government. Working with a mortgage broker can also help you find lenders that offer low down payment options. Remember that a lower down payment typically means higher monthly mortgage payments and potentially higher interest rates. It’s essential to do your research and speak with a mortgage professional to determine the best option for your situation.


How Does Mortgage Loan Insurance Work?


The mortgage loan doesn’t protect the buyer. It’s essential to understand how mortgage loan insurance works. If you cannot make a down payment of 20% or more, you will need mortgage loan insurance, which is typically provided by the Canada Mortgage and Housing Corporation (CMHC). Borrowers pay an insurance premium calculated based on the loan-to-value ratio. The premium can be paid upfront or added to the mortgage principal. It’s important to note that mortgage loan insurance protects the lender, not the borrower, in the event of default. If you are considering a mortgage with a loan-to-value greater than 80%, they may need portfolio-based insurance. 


How Much Will I Need For Closing Costs?


Closing costs for home buyers in Canada typically range from 1.5% to 4% of the purchase price which can include legal fees, title insurance, home inspection fees, appraisal fees, land transfer tax, and mortgage insurance premiums if putting less than 20% down. Legal fees can cost between $500 and $2,000, while title insurance can cost between $200 and $400. A home inspection can cost between $300 and $500, and appraisal fees can range from $200 to $500. Land transfer tax varies by province and mortgage insurance premiums range from 0.6% to 4.5% of the purchase price. It’s recommended to work with professionals to understand all costs associated with the transaction.


Should I Lower the List Price or Offer an Incentive to Sell My Home Faster?


When deciding whether to lower the listing price or offer incentives to sell a home faster, there are several factors to consider. Lowering the price can attract more buyers looking for a good deal but may result in selling the home for less than its actual value. Offering incentives such as paying for closing costs or a home warranty can make the property stand out and attract more buyers, especially if the home is generating little interest. A real estate agent can provide valuable insights into market conditions and pricing trends to help make an informed decision on the best strategy for selling the home.


What Colour of Homes Sell Quickest?


The best colour for homes is subjective and can depend on various factors, such as location, market trends, and personal preferences. Studies suggest that neutral colours like white, gray, and beige tend to appeal to a broader range of potential buyers, while shades of blue, gray, and beige have been found to sell for more in some markets. Ultimately, the best colour for a home to sell will depend on the specific factors of the property and the preferences of potential buyers in the local market.


What Should I Look for in an Investment Property?


To find a lucrative investment property, consider several factors. Firstly, the property’s location should be in high-demand areas such as neighbourhoods with good schools, public transportation, shopping, and entertainment options. The rental income should also cover mortgage payments, property taxes, and maintenance costs and generate a positive cash flow. The property’s condition should be well-maintained, structurally sound, and in good condition or consider flipping a fixer-upper. The potential for property value appreciation and financing options, including interest rates and mortgage terms, should also be considered. Seek professional advice from real estate agents, accountants, and lawyers before making investment decisions.


Does a Higher Credit Score Mean a Better Mortgage Rate?


A higher credit score generally means you are more likely to receive a better mortgage rate. Lenders evaluate your creditworthiness based on your credit score, which ranges from 300 to 900, with a score of 650 or higher considered good credit. Most lenders prefer borrowers with a credit score of at least 620 to qualify for a mortgage. However, lenders also consider other factors such as income, debt-to-income ratio, down payment amount, and the type of mortgage. It’s essential to shop around and compare mortgage rates from different lenders to ensure you get the best deal possible based on your financial situation.


I hope this blog answers some of your real estate questions and you can put your mind at ease. Start with getting pre-approval for a mortgage to understand how much house you can afford and focus your search on properties within your budget. While there is no best time of the year to buy a home, understanding local market conditions can guide you in making an informed decision.


Contact your local REALTOR® today for more information.