Brampton and Georgetown Real Estate
Breaking News and Tips
Get Pre-Approved for a Mortgage
A pre-approval will tell you how much you qualify for, what your mortgage payments will be, and you'll get an interest rate that will be held for up to 120 days so you are protected should rates rise. If you are house shopping, you won't fall in love with a home you can't afford, and you can act quickly when you find your dream home. Pre-approvals also make sense for renewals and refinances when rates are rising.
2022 Real Estate Forecast
RE/MAX is anticipating steady price growth across the Canadian real estate market in 2022, as reflected in the 2022 Canadian Housing Market Outlook Report. The ongoing housing supply shortage is likely to continue, putting upward pressure on prices. As a result of these factors, RE/MAX Canada estimates a 9.2-per-cent increase in average residential sales prices across the country.
Given inflationary pressures, the Bank of Canada indicated in their last rate announcement that rate hikes could take place earlier than previously indicated, in mid-2022, which means variable rates that rise and fall in tandem with the key rate will start climbing. Views among economists vary as to how many hikes we'll see in 2022 and 2023 because no one really knows whether inflation is truly transitory given supply chain issues, or even if it won't be a long-term issue at all.
Keep in mind that even with the projected increases, we'll still be in an ultra-low-rate environment and an incredibly stable market. We've also seen increases before to only see them decrease again.
Debt Service Ratios
Debt service ratio, expressed as a percentage, is the ratio between gross income and debt payments. This ratio allows a lender to measure how effectively a person can manage your debt payments based on their income.
The two major types of ratio used are, gross debt service ratio (GDS) and the total debt service ratio (TDS).
The GDS is the ratio between housing expenses and gross income. Housing expenses consist of mortgage payments, monthly property tax payments, heating bills, half of condo fee if applicable, and any other housing-related costs.
The TDS is the ratio between all monthly debt payments, including housing, and gross income. In addition to housing costs, the TDS ratio also includes monthly debt payments such as credit card bills, car payments, line of credit payments, and more.
The Canada Mortgage and Housing Corporation (CMHC) sets limits on how high debt ratios can be in order for a buyer to be eligible for a mortgage loan. This prevents borrowers from taking on mortgage debt that they can't afford.
For GDS, the CMHC has a hard limit of 39%, although most banks try to keep borrowers below 32% and will only offer loans at higher debt ratios in specific circumstances.
For TDS, the CMHC has a limit of 44%, though most banks prefer a borrower to stay lower than 42% for mortgages.
Real Estate Interaction
A new RE/MAX report provides insights into the future of real estate. While 94% of North Americans search for a home online and more are signing documents virtually, they also value real-life interactions, building rapport and receiving reassurance. Tech adoption and innovation continue to grow, of course, but 80% of North Americans report being interested in full-service agents. When asked what would become more important to them in the next two years, respondents said trust and familiarity with an agent (61%), ease of contact/prompt responses (60%), good reviews online (59%), years of experience (58%) and fastest service (58%). It is all about balance when it comes to technology; the consumer is interested in convenience but also in real-life interactions.
Why Do You Need An Appraisal
Whether you're purchasing a new home or want to refinance your current mortgage, it's important to understand the role of the home appraisal and how it can impact your mortgage application.
After you submit an application, your lender may require an appraisal, which is simply an unbiased determination by an accredited independent appraiser of the market value of the property your lender will be financing.
When you purchase a home, your lender wants to be sure that the home's selling price is an accurate representation of the home's condition and neighborhood, and that you are not borrowing more than the home is worth. The lender also wants to be sure the property meets its lending guidelines.
When you refinance your mortgage for debt consolidation or to access funds for other needs, the appraisal will be used by the lender to determine the amount of funds that you can borrow since you can only refinance a set amount; up to 80% of your home's appraised value.
When switching your mortgage to a new lender at renewal to get a better rate or terms, the appraisal is again required to verify the property's value.
To complete the appraisal process, an appraiser typically visits the home to get the information needed. The appraiser will also analyze market comparables and then provide the lender with a written opinion of the property's value. If the appraised value is sufficient, your mortgage approval is finalized assuming all other conditions have been met. The cost is often passed along to you, typically forming part of your closing costs.
RE/MAX Consumer Survey
In a recent RE/MAX Consumer Survey, 91% of Canadians said that when looking for a REALTOR® for outside support, the top must-haves are ethics in business, patience, active listening and empathy.
No surprises here.
Capital Gains Tax
Currently, the sale of a principal residence is exempt from capital gains tax. However, a proposal to tax the capital gains on the sale of a principal residence keeps raising its head.
Some see a capital gains tax on a home as a way to cool housing markets. We need to watch and listen to politicians and their staff very closely on this issue.
Showings/Viewings During COVID-19
Many Sellers are naturally concerned during COVID-19 about strangers going through their home while it is on the market. There seems to be 2 basic alternatives being adopted in dealing with this issue;
· Trust the protocols imposed by the listing Brokerage and carry on as before the pandemic. Obviously, with this approach, it would make sense to review company protocols before selecting a Listing Agent.
· Don’t let people through the home until an offer has been negotiated and conditionally accepted. In other words, a Buyer submits an offer before they see through the property and they include a conditional clause in the offer which allows them to get out of the deal if they don’t like what they see when they walk through the home. This Buyer viewing should take place as soon as possible after the offer is negotiated. This approach is based on the valid assumption that only serious Buyers will go to the extent of negotiating an offer and perhaps even submitting a deposit on a property that they haven’t viewed.
This issue can be further complicated if the property being sold is occupied by a Tenant who may have legitimate health concerns.
Let me be clear; you MUST, MUST, MUST do a final walk-through of the property you are buying, as close as possible to the day the deal closes and you get the keys. Don’t worry if the Seller has lots of boxes lying around and the place looks untidy. Remember, they are moving soon! What you are really looking for includes, but is not limited to;
Appliances - Are the appliances the same ones that were there when you previously viewed the property and which you included in your offer.
Repairs - The Sellers might have agreed, for example, to repair the walls after taking down photographs or even TV brackets. Make sure that this has been done.
Condition on closing - Most Agreements include a clause obliging the Seller to leave the property in a ‘clean and broom swept’ condition and to remove all garbage, before the deal closes. It would surprise you how often garbage is pilled up at the back of the garage, a shed, or even under the stairs to the basement.
Hidden surfaces - If some furniture has been moved, check the wall that it covered, for damage or even mold. A Home Inspector is not permitted to move furniture during an inspection so a final walk-through might be the only chance you will get to check this out.
There are remedies if, for any reason, the walk-through reveals problems.. Your agent and lawyer know what to do.