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First-Time Home Buyer’s Guide: Part 1

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Surrey604 welcomes Simon Rai as a Guest Contributor! Simon is a realtor residing in Surrey, and active in the community.  Look for more from Simon in the upcoming weeks.

The Greater Vancouver Home Builders’ Association (GVHBA) recently held its 18th annual First-Time Home Buyer Seminar at the Bell Performing Arts Centre in Surrey. Needless to say, the seminar contained a wealth of information for first- time home buyers, and had a record number of attendees. A panel of industry experts provided great information about the steps involved in the home buying process, the role of various professionals in the transaction, and also the fees and incentives that could make or break a deal. As a Realtor in Surrey, I thought it would be interesting to attend and see if I could learn a thing or two that I didn’t already know. With the notes I made from the seminar and my own personal experience in the field, I’ve written this 3 part guide of the things you should know before buying your first home.

Part 1: Choosing the right team.

Throughout the real estate transaction, there are 3 key individuals that you will be working with. These include the realtor, the mortgage broker, and the real estate lawyer. Other individuals such as an appraisal expert and notary may also be involved. It’s very important to choose the right mix of individuals. Their experience and specialized skill can go a long way in helping you save money and avoid mistakes. Keep reading for an overview of the role that each individual plays in a typical real estate transaction.

The Realtor’s duty is not only to help you find the right home, but also to negotiate the price, put together the terms of the offer, and provide market expertise to ensure that you make a good purchasing decision. The first thing you should do in the search for your first home is to find a good realtor to assist you. The certainty and reliability that a realtor provides is invaluable, especially considering the fact that buying a home is one of the biggest decisions you will make in your life.

The mortgage broker also plays an important role in the transaction, and is someone you want involved early in your search for a home. By speaking with a mortgage broker and getting a mortgage pre-approval, you know exactly how much you can afford to spend on a home. This is very important information, especially for your realtor who is trying to filter through hundreds of homes to find one that’s right for you. A pre-approval is simply a confirmation of how much the lender is willing to lend you, and there is no obligation so it’s definitely one of the first things you should do.

The real estate lawyer or notary public usually comes into the transaction towards the end of the transaction, but it’s definitely better to have them involved from the beginning. The lawyer’s role is mainly to review your contract of purchase and sale (including adding any clauses and subjects that may benefit you), do a title search for any liens or mortgages that may be outstanding on the property, and prepare the transfer and mortgage documents.

Some criteria to consider when choosing a professional are their level of experience, reputation, and cost. Start by asking friends and family who they would recommend, and meet with the individuals you are considering in person. It’s definitely important to shop around and compare costs, as the fees can add up quickly (I will be writing more about this next week). You can also ask your realtor for advice, as they’ve probably worked with several mortgage brokers and lawyers in  the past.

If you’ve never bought a home before, there are many unexpected things that can happen. Without the experience required to complete a huge transaction like buying a home, it can be easy to make mistakes and lose money. By hiring the right team, you can not only avoid these mistakes, but also gain lots of valuable insight to help your real transaction progress smoothly.

If you need any help with your next real estate transaction, or have any questions about the information in this article, feel free to email me at simon@surreyrealtor.net

Check back soon to read Part 2 of my guide which will be about the costs associated with buying and owning a home. Also check out the GVHBA site for lots of valuable resources to help you in the home buying process.

Coming Up:

Part 2: Unexpected costs of buying and owning a home.

Part 3: Tax credits and incentives available for first time home buyers.

Real Estate

How Will Coronavirus Impact The Housing Market?

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The coronavirus has already had a huge impact on how we all live our lives, leading to mass unemployment worldwide, changes to our day to day structure and permanently forcing us into our homes for the time being. In a time where there is so much focus on houses and the protection they bring, how is the housing market going to look on the other side of this crisis.

Talk of a potential collapse has circulated for years, as we get further and further away from the 2008 financial crisis. Now that we’re looking down the barrel of unprecedented change without an end date in sight, what has been the early impact on the housing market and what can be expected?

A change in price

While we’re still in the early stages of both a national and worldwide fightback against the virus, it has been long enough for significant financial changes to take place. Like many industries, the housing market saw closures, unemployment and furloughing in the early days of the crisis. Like the majority of the world, Surrey ground to a halt when more extreme lockdown measures were implemented to contain the virus.

Many couples and individuals who were lining up to sell their house in the not too distant future will be asking when they can expect to get an appropriate return on their investment. While the year started somewhat strongly, with the Vancouver housing market considered to be stable and strong despite some soft lowering in house price, the immediate coronavirus fallout has put everything into limbo, leading experts to fear the worst.

Fortunately for potential sellers in the Vancouver area looking to offload their home within the next couple of years if not months, it is estimated that the coronavirus crisis will not lead to a significant drop in house prices, with some experts estimating appreciable gains within the next couple of years. This is a positive sign for real estate, as it seems rather than leading to a complete collapse as some may have thought, it will simply set the market back by a year with a small estimated decrease.

While the financial implications of this crisis will lead to some buyers being unable to participate in the market and some sellers holding off for a couple of years, there are still millions of people nationwide looking to buy a new home and sell their current one in the immediate future, crisis or not. Thankfully, Surrey is considered to be a “safe bet” when it comes to the housing market, with prices remaining stable in the area despite fluctuation in neighbouring towns and cities.

Sales will collapse

Unfortunately, while house prices may be able to find some level of stability in the aftermath of the crisis, the same cannot be said for the number of sales.

Coronavirus’ greatest impact has been on our way of life, removing all sense of human interaction. Between viewings, contract signings and the moving process, buying a selling a house is all about human interaction, and simply not feasible under lockdown measures or while the threat still looms. This lead to an immediate fall in the number of sales between February and March of this year.

Unlike the travel industry where lost finances from 2020 are expected to be somewhat recouped through delaying holidays and travel to 2021, house purchases are not being delayed in the same manner. This presents the industry with a huge hole in the yearly revenue total with no obvious sign of when it is going to be filled.

Deals are in limbo

While future deals are being cancelled, ones that were in process as the virus started to make an impact are now in limbo. This presents a challenge for the market to protect these assets and the challenge of how finances surrounding present deals will be affected by coronavirus changes.

There will be many people who had sold their current house and were in the process of buying another when the lockdown was announced and businesses closed, and vice versa. Many buyers aren’t able to get into their new homes. Potential sellers are unable to hold viewings on their homes, delaying the process by many months.

This has created similar issues in the rental market. Not only have there been talks of and developments concerning freezing rent payments during the crisis as low paid or unpaid tenants deal with the fallout of rising unemployment, but there is the issue of people whose contracts have run out during the crisis and have been unable to secure new housing due to cancelled viewings.

This had lead to an increase in online services as estate agents who were in the position to move to an entirely remote setup thrive in a less crowded market. Companies throughout the process of purchasing a house have moved into this model such as online mortgage broker Breezeful. Likewise, many estate agents have been offering virtual viewings of a 3D mapped and controllable walkthrough of a property, thanks to scanning and display software from Matterport.

While no substitute to being inside a property, there were signs of the industry heading this way before the full impact of the virus became apparent, but its impact could increase their popularity and potentially the speed and processes of selling and buying a house, which could be essential to market recovery as we leave quarantine.

With some of the biggest banks in Canada offering homeowners the chance to defer mortgage payments for up to six months, there is already evidence of a significant response to the coronavirus’ impact on the housing market. While not forecast to be the disaster it has been to industries such as retail and the arts, we are yet to fully understand what it could mean for the finances and practices of the sector.

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Real Estate

Building permits issued in Surrey breaks $2 billion mark

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The City of Surrey set a new record in building permit values issued in 2019. The total construction value exceeded $2.29 billion last year, which is 33% higher than the previous record total of $1.52 billion from 2018.

In 2019, $1.57 billion of the construction value came from residential permits which translated to 6,632 new dwellings that will be built in Surrey.

“The economic confidence in Surrey has reached new heights and breaking the $2 billion mark in building permits is uncharted territory for our city,” said Mayor Doug McCallum. “The livability, affordability and recreational amenities that Surrey offers have established this city as a place where you can raise your family or grow your business. With the new Surrey SkyTrain extension on the horizon and with Council’s Smart Development initiatives, Surrey will be a prime destination for new residents and businesses for years to come.”

While the Planning and Development Department issued a total of 16,498 building, plumbing and electrical permits in 2019, staff managed to reduce the wait time for single family dwelling to 10 weeks by the end of the year. In comparison, the wait time for a single family dwelling permit peaked at 25 weeks in 2017.

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Real Estate

Should I Refinance my Mortgage? Knowing When to Do it

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If you’re looking to reduce monthly mortgage payments and get a lowered interest rate, you could also convert equity to cash or switch to a fixed-rate loan. These are all reasons to refinance, but while it may sound enticing at first, you will want to make sure that it is the right time for you to do it. Before you decide to refinance, it is key to understand the process and evaluate the pros and cons of your situation. Homeowners are sometimes surprised about the amount of documentation needed to get approved for a mortgage refinance. If you learn the basics, you will be able to decide if it is right time for you to do it as well as what will happen when you do.

Reasons to Refinance

There are plenty of reasons you would want to refinance, but there are a few that cut through the rest. First the main goal is usually to lower your payments. It shouldn’t be to just decrease the payment for the short-term, you should be pursuing better interest rates. This is really what will cost you in the long run. Using your home equity to better manage debt is another option, but you are advised to be careful when it comes using your positive financial situation to pay off a negative one. Refinancing will help you pay off your loan faster.

The Process of Refinancing

Refinance is replacing an existing mortgage with a new one. This typically has people refinancing their mortgage in order to reduce their monthly payments while decreasing their mortgage to a fixed-rate and lowering interest. Adjustable rates are typically more expensive, and when you refinance you can lower the cost.

Other people just need access to cash in order to fund a renovation project or pay off debt. This will leave leverage to use the equity from the home to obtain cash. It doesn’t matter what your goal, you should get to know the process of refinancing to get the most out of it. It works a lot like your first mortgage, but timing is even more key. Research your option, collect financial documents, and submit a refinancing application and you’ll be better equipped to benefit.

Refinancing Benefits

Lowering payments is by far the biggest reason that people refinance. The average homeowner may save up $160 or more per month with a refinance. With a lower monthly payment, you are free to put savings toward other debts and expenditures. You can also apply savings towards your monthly mortgage and pay off the loan sooner.

Another reason is to remove private mortgage insurance. If you have enough property appreciation or the principal paid off will not be required to pay mortgage insurance that will reduce your total monthly payment. Homeowners who took out a mortgage in the early stages of their career, it may have made senses financially. But things change. For those who want to pay off the mortgage sooner, reducing the term of the loan can be enticing. There are many more benefits, but none of them will matter if you don’t consider the timing.

When to Refinance

There are many factors that go into refinancing. According to the site MoneyPug, which is used to make a mortgage comparison, first you should make sure have outstanding credit. If you try to refinance when you have poor credit, your interest rate will be sky high. You should also keep up on the market and learn when mortgage prices are at their best.

Furthermore, most banks and other lenders require borrowers to maintain their original mortgage for at least 12 months, but you don’t want to wait too long. Refinancing typically starts over the process, which means that the years you’ve spent paying off the home will not be accounted for. You shouldn’t wait too many years, but you should always make sure it is in fact the right time for you. The terms of each lender are different and you should make sure they are helpful to you.

It doesn’t matter whether you have a lot of money or little, a big house or a small one, paying attention to the time in which you refinance is key. You want your credit to be solid, your financial situation stable, and the years of payment to be right. Once you have thoroughly researched, you will know when to refinance and when to hold off.

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Real Estate

Thinking About a US Condo Investment? Here’s What You Need to Know

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Condos can be great options, not just for personal enjoyment when vacation time rolls around, but as an investment. Of course, as an investor, you want to make savvy decisions with your money. No doubt, you’ve realized that the US condo market offers a much wider range of investment opportunities than what’s available in Canada, plus you get a better yield on rental rates in the US than here at home.

So far, it seems like a no-brainer. However, there are a few things that you’ll need to consider before you make the leap to being an international real estate investor. We’ll take a closer look at those below.

Wear and Tear

If you’re renting out your condo, you’re going to need to consider the wear and tear on things like your stove, your washer and dryer, the oven, the HVAC system, and more. These appliances can see a lot of wear and tear during normal use, but if you’re renting out the condo, there’s a chance that you’ll see accelerated wear and premature failure.

Where does that leave you if you don’t have any manufacturer’s warranty remaining? A home warranty could be just the ticket.

What’s a Home Warranty?

A home warranty is really nothing more than what it sounds like – a warranty you purchase from a third party that covers items within your home. When the manufacturer’s warranty ends, your home warranty kicks in. So, suppose your oven failed. Instead of searching online or flipping through a phonebook for a repair company, you’d report it to the warranty company, and they would handle everything else.

What Warranty Companies Exist?

You’ll find a host of home warranty companies operating in the US. You could choose to purchase an Amazon home warranty. You could also consider warranty coverage from any of the following companies:

  • Select Home Warranty
  • First American Home Warranty
  • 2-10 Home Buyers Warranty
  • Choice Home Warranty
  • Total Home Protection
  • Advanced Home Warranty

You get the idea. There are lots of options. When you compare your choices, make sure you match covered items and systems so that you’re making an informed decision.

What Are the Benefits of a Home Warranty?

A home warranty offers some pretty obvious benefits for all homeowners. However, they are even more pronounced for rental owners living internationally. Suppose an appliance fails while a renter is in the property, but you’re in Canada and they’re in Los Angeles or Miami. How would you even go about finding a repair company? With a home warranty, there’s no stress or hassle involved. It’s all about peace of mind and getting the best return on your investment.

The Exchange Rate

Historically, US currency has been stronger than Canadian, and that works to your advantage in this instance. Because you’re able to rent your condo in the US, you can see higher returns on your investment. However, make sure that you account for everything that’s involved in exchanging the funds.

Insurance

You’ll certainly need insurance on the condo. You will need condo insurance to cover the dwelling itself. Renters’ insurance will only cover the contents (and should really be purchased by the person renting your condo).

With a condo, you own everything within the structure, from the walls inward. While the condo association or property owner will deal with damage to the grounds and the exterior, as well as stairways, corridors, and other public-use spaces, you’re responsible for covering the dwelling portion of your space.

To really understand what you need to cover with insurance is to read through the association documentation, which should spell out what is considered “contents” and what is considered “betterments” or “improvements” and who is responsible for what.

If you’re on the fence about insurance or unsure what US insurers to consider, the Allstate website offers a lot of explanation about condo coverage in the States.

In Conclusion

In the end, buying a condo and using it as a rental property can be an excellent investment decision. Don’t forget to research moving companies NJ to find a helping hand. You simply need to ensure that you’ve thought through the things discussed above and have a plan in place for how you’ll handle them.

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Real Estate

3 Life Saving Tips for First-Time Home Buyers

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The idea of buying your own home is so exciting and moving. It’s one of the biggest dreams of every person, and why not? Having your own home is not only emotionally appealing, but it also means that you don’t have to bear the hassle of dealing with landlords and taking out a huge sum every month for rent. But buying a house is a nerve-wracking and complex process, especially if you are a first-time buyer.

See more: the 7 best portable air compressors

First-time buyers get entrapped in so many ifs and buts, feel confused and helpless due to lack of buying experience and knowledge. It is not only daunting, but you can also end up landing on the wrong deal and regretting your decision. The idea of buying your own home is so exciting and moving. It’s one of the biggest dreams of every person, and why not? Having your own home is not only emotionally appealing, but it also means that you don’t have to bear the hassle of dealing with landlords and taking out a huge sum every month for rent. But buying a house is a nerve-wracking and complex process, especially if you are a first-time buyer.

First-time buyers get entrapped in so many ifs and buts, feel confused and helpless due to lack of buying experience and knowledge. It is not only daunting, but you can also end up landing on the wrong deal and regretting your decision. Here are some tips by a reputable Toronto realtor to ensure that your first-time home buying deal doesn’t turn into a nightmare:

Save Enough for Down Payment:

Obviously, you need money to buy a home. Even if you are not paying the whole amount in one go, you still need money for a down payment, which is essential anyway. At least you should be prepared to put 20% down payment if you don’t want to increase your expenditures like spending on private mortgage insurance (PMI) which a mortgage company demands as their security. Even single-digit down payment offers of first-time buyer programs are a trap that increases your total cost.

The best option is to start saving for the down payment before fixing your deal. Save up your bonuses, tax refunds and cut down extra expenditures. You can buy designer jacket later after buying your house; it isn’t important than buying a home. Home buying itself is quite a costly affair, make sure to play smartly to prevent adding extra cost.

Maintain Your Credit:

Your current credit status is a huge factor in determining the smooth home buying experience. Mortgage loan companies check your credit before approving your loan and deciding your interest rate and approval terms and conditions. Make sure you have enough credit before beginning the procedure. Moreover, improve your credit score and avoid any error which might make you suspicious for loan approval. Most loan lenders give considerable importance to the credit score as it signifies your reputation and possibility to return the loan on time.

Hire the Right Realtor:

You can’t know better about the best locality for buying a home, its houses and neighborhood than a realtor, even if you are a native of that place. Choosing the right home for buying requires a lot more knowledge of different things than just knowing about the location of a locality. That’s where a real states agent helps you! Hire a native realtor with many years of experience in the field as he will know each and every aspect of the houses of that place.

Moreover, go for a realtor who is dedicated and self-motivated to fix the best deal for you. No matter how excited you feel about buying your home, don’t forget to have some pre-planning and right strategies in your hand. Your home is your dream place; don’t turn it into a nightmare!

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