Have you made your New Year’s resolutions yet? If you’re planning to buy or sell a home in 2017, here are a few key resolutions that will help with a smooth transaction.
New Year’s resolutions for homebuyers
1 | What’s your credit rating? Have Equifax, TransUnion or another credit reporting agency pull your credit report. If necessary, take steps to improve a poor credit rating by paying off debts before applying for your mortgage.
2 | Make a budget. Can you afford a home and all the associated costs? Is this the right decision for you? Canada Mortgage and Housing Corp. offers tools to help you calculate your net worth, current household budget, monthly debt payments, and how much you can realistically afford to spend. Your affordability assessment may indicate you need a larger down payment or a lower price point for your purchase. Also keep in mind that new mortgage qualification rules took effect in October, requiring that all insured mortgages qualify at the Bank of Canada’s benchmark rate of 4.64 per cent, even if your lender offers you a lower rate.
3 | Get your financing – and supporting documents – in order. At the very least, lenders and mortgage brokers will require documentation that proves your personal information, your net worth, income, employment, the amount/source of your down payment, and your ability to pay the closing costs. Closing costs generally range from 1.5 to four per cent of the purchase price and your lender may provide a loan to cover those.
4 | Get pre-approved for a mortgage to determine the amount you can afford based on the lender’s review of your finances. This will also provide written confirmation of the interest rate that will hold for around 90 days.
5 | Find the home. Search ads for homes in your desired location and price range with your preferred features. Look online, in print and of course, a tour of open houses is a fun way to spend a few hours of a weekend. If you’re opting for a brand new home, visit presentation centres, and explore new communities in person to get a feel for what living there will be like. Ask friends and family for home-builder referrals, and check with your local home builders’ association for members and reviews.
As if buying a new home wasn’t complicated enough, if you already own a home, you’ll need to add a sale to your to-do list.
New Year’s resolutions for home sellers
6 | Review your mortgage agreement with your financial institution and/or a mortgage professional. If you’re in the first year of a five-year term, the payout penalty might be so high that you decide to wait until at least the mid-point, if not the end of that term, to sell your home.
7 | Assess the selling costs, which may include repairs, home appraisals and inspections, legal and realtor’s fees, so that you can budget and save for them.
8 | Crunch the numbers . Will your home’s proceeds cover your next home purchase? Do you plan to invest part of the proceeds?
9 | Purge and fix. De-clutter your home six or more months in advance, because when staging your home for sale, overstuffed storage areas suggest a lack of space rather than your organizational tendencies. If you’re downsizing into a smaller home, you’ll likely need to edit down your movables anyway, so consider this resolution twofer.
While you’re combing through your stuff, identify items that are worn, outdated or don’t work, then repair or replace them. Ask friends or family to help you identify what needs to be done, but be aware that they may be uncomfortable with the level of honesty required. A professional home stager or your real estate agent would be better suited to the task. If things like a leaky roof or basement isn’t repaired, buyers will expect a reduction in price.
10 | Assess comparable homes in your neighbourhood no more than three months prior to putting your home on the market because the conditions can change relatively quickly. Ask your selling agent to evaluate your home no more than six to eight weeks before you plan to put it on the market.