This post is sponsored by CIBC, however the views and opinions expressed represent my own and I only work with brands & products that I trust and believe in.
It could be that spring is in the air, or because I’m turning 30 soon and am in some weird nesting phase, but something is making me seriously consider buying a place again!
I can’t help myself. I’ll just find myself on MLS and not even realize it. I know buying a house in Toronto is out of the question for now, but I’m thinking this might be the time my husband and I consider buying a condo or townhouse in the city instead.
I know it’s a hot market right now, but the facts remain that I can’t predict if prices will go down anytime soon and I don’t want to delay buying a place and regret it down the road (like everyone keeps telling me).
Plus, my husband and I can actually afford a condo or townhouse in a decent neighbourhood in Toronto. And I was even thinking we could find a two-bedroom place and rent out the second room on AirBnB to subsidize our mortgage. We have friends who are doing this with their two-bedroom rental and they definitely have a good thing going.
1. Find Out How Much Home You Can Afford First
As any smart potential homebuyer knows, before we start looking at places again and interviewing realtor candidates, we need to find out how much home we can actually afford. My husband and I did this last year before we started looking, and it’s time for us to do it all over again since our circumstances have changed.
The first step we take to do this is browsing places we like on MLS, then plugging the numbers into a mortgage affordability calculator to see if it’s realistic or just a pipe dream. Once we have a better idea of our price range, that’s when it’s time to get pre-approved for a mortgage and find the best rate possible.
2. Do Your Research & Find the Best Mortgage Rate Possible
There are a number of routes you can take to do this, such as going through a mortgage broker. But if you want to do the work yourself and go directly to the banks to find the best rate, you can do that too. The only thing with the second option is it will lower your credit score the more institutions you go to, whereas it won’t affect your score as much if you go with a mortgage broker.
Then again, you may just want to get a mortgage with a specific financial institution. For instance, CIBC is currently offering a low 9-month introductory mortgage rate followed by a great ongoing rate. They even have a Mobile Mortgage Advisor that’s driving around to open houses to provide additional information about mortgages to potential homebuyers which is a pretty nifty idea.
3. Don’t Forget Those Hidden Costs at the End
The one thing I always forget when I’m in full house hunting mode are the closing costs. They’re almost like an afterthought…a really expensive afterthought. Luckily we don’t have to pay for a realtor when buying a place since that’s the seller’s burden to bear, but closing costs can still be a big kick in the pants.
Closing costs include your home inspection, land transfer tax, legal fees and title insurance, and they could amount to 4% of the purchase price. So make sure besides saving up for a down-payment you also crunch the numbers and save a little extra for those pesky closing costs.
So, before you even step foot in an open house, what should you do? Let’s review…
- Find out how much you can afford
- Get pre-approved for a mortgage
- Calculate how much your closing costs will be
With these three steps in mind, you’ll be ahead of the pack by making a financially savvy home purchase. I just hope the next time my husband and I look, we actually find something we’ll want to call our next home!