As a first-time buyer, there are some homebuyer mistakes you should avoid to ensure a smooth and successful experience!

FIXATING ON THE LOWEST INTEREST RATE
A reasonable interest rate is important, but not at the expense of heavy restrictions and penalties. Make a solid long-term plan to pay off your mortgage and then find one that’s flexible enough to accommodate life changes, both planned and unexpected.

THINKING YOU DON’T NEED A REAL ESTATE AGENT
You might be able to find a house on your own, but there are still many aspects of buying real estate that can confuse a first-time buyer. Rely on your agent to negotiate offers, inspections and other details. The money you would have saved on commission can be quickly gobbled up by a botched offer or overlooked repairs.

GETTING YOUR HEART SET ON A HOME BEFORE YOU DO YOUR HOMEWORK
The house that’s love at first sight may not always be what it seems, so keep an open mind. Plus, if you jump in too fast you may be too quick to go over budget or you might overlook a potential pitfall.

CHOOSING A FIXER-UPPER BECAUSE THE LISTING PRICE IS CHEAPER
That old character home may have loads of potential, but be extra diligent during the inspection period. What will it really cost to get your home to where it needs to be? Negotiating a long due-diligence period will give you time to get estimates from contractors in case you need to back out.

COMMITTING TO MORE THAN YOU CAN AFFORD
Don’t sacrifice retirement savings or an emergency fund for mortgage payments. You need to stay smart to life’s changes and overextending yourself could put your investments—including your house—on the line.

GOING WITH THE FIRST AGENT WHO FINDS YOU
Don’t get halfway into house hunting before you realize your real estate agent isn’t right for you. The best source: a referral from friends. Ask around and take the time to speak with your potential choices before you commit to a realtor.

DIVING INTO RENOVATIONS AS SOON AS YOU BUY
Renovations may increase the value of your home, but don’t rush. Overextending your credit to get upgrades done fast doesn’t always pay off. Take time to make a solid plan and the best financial decisions. Living in your home for a while before renovating will also help you plan the best functional changes to the layout.

CHOOSING A HOUSE WITHOUT RESEARCHING THE NEIGHBOURHOOD
It may be the house of your dreams, but annoying neighbours or a nearby industrial zone can be a rude awakening. Spend some time in the area before you make an offer and talk to local business owners and residents to determine the pros and cons of living there.

RESEARCHING YOUR BROKER AND AGENT, BUT NOT YOUR LAWYER
New buyers often put all their energy into learning about mortgage rates and offers. But don’t forget that the final word in any deal comes from your lawyer. Like finding a real estate agent, your best referral sources for a lawyer will be friends and business associates.

OPTING OUT OF MORTGAGE INSURANCE
Your home is your largest investment, so be sure to protect it. Mortgage insurance not only buys you peace of mind, it also allows for more flexible financing options. Plus, it allows you to take advantage of available equity to pay down debts or make financial investments.

If you are ready to search for your first home, don’t hesitate to reach out to me!

Nearly halfway through a three-year program to help first-time homebuyers, far fewer Canadians have taken advantage of it than what the government budgeted for.

Figures tabled in Parliament on Monday show that, as of Jan. 31, only 9,108 approved applicants had received the First-Time Home Buyer Incentive, which is in the form of a shared-equity mortgage.

Just $170 million has been disbursed in incentives, out of $1.25 billion the three-year program is worth. It began on Sept. 1, 2019, and is run by the Canada Mortgage and Housing Corporation.

If the program exhausted all its funding by the end of Year 3, it would help 100,000 Canadian families become homeowners, said federal officials in 2019.
The incentive is meant to help first-time homebuyers reduce their monthly mortgage payments. Applicants who qualify can borrow five or 10 per cent of the purchase price of a home to put toward a down payment.

Housing experts have said the low take-up of the program is because its eligibility rules don’t reflect skyrocketing house prices in Canada’s big cities.

The maximum home price eligible for the incentive is equal to four times the homebuyer’s income, with income capped at $120,000.

In an effort to increase access to homes in major cities, Ottawa announced in last November’s fall economic statement that it was changing the rules for homes in Toronto, Vancouver, and Victoria’s census metropolitan areas.

Instead of four times household income, the threshold increased this spring to 4.5 times household income, while the buyer’s income threshold was raised to $150,000. As a result, the maximum eligible home price in those three markets increased from $505,000 to $720,000.

But the changes may not have the desired effect, because home prices have risen dramatically during the pandemic.

More than 70,000 homes were sold in March, surpassing the previous record for the month by 22,000 purchases, the Canadian Real Estate Association said Thursday.

The average selling price of a Canadian home sold on the association’s MLS system was $716.828, up by 31.6 per cent in a year.

For the first time, the average selling price of a home in the Greater Toronto Area is now over $1 million, the Toronto Regional Real Estate Board said last month.

The dramatic increase in prices and sales has raised concerns that younger Canadians are being left out of homeownership, and that Canada’s housing market is overheated.

Last week, Canada’s banking regulator proposed raising the level of the mortgage stress test to ensure borrowers can afford higher rates, a move that would reduce the purchasing power of buyers by about five per cent.

Ottawa is watching the housing market “very closely,” and recognizes that rising prices have made it hard for many young Canadians to buy a home, Finance Minister Chrystia Freeland said late last month.

In a statement, Social Development Minister Ahmed Hussen’s office said Ottawa is making it easier for Canadians to afford a home by making the recent changes to the incentive, and by planning to spend $70 billion on a national housing strategy.

The homebuyer program will be “subject to a formal evaluation in due time,” said Mikaela Harrison, Hussen’s press secretary.

Only 85 applications have been submitted for Toronto mortgages through the homebuyer incentive, and only 44 were approved, according to the tabled data.

That’s fewer than the applications in St. John’s, N.L., for example, which had 89, of which 67 were approved.

Among Canadian cities, the program was most popular in Edmonton, which had 1,839 applications, 1,399 of them approved.

During the COVID-19 pandemic more than three million Canadians took advantage of deferred payments to help with financial issues.

According to Equifax, last year there were 900,000 deferred mortgages and 1.2 million deferred credit card payments.

These deferral programs have been winding down and payments are now getting back on track.

Deferred payments are not supposed to have an impact on your credit rating or score, but it could if a lender records a payment as missed or late instead of deferred.

Equifax Canada said it worked with lenders to implement reporting guidelines to make sure payments were not reported as late.

“They were reporting them as paid as agreed, because that’s technically what they were. The lender had made an agreement with the consumer that it was okay not to make a payment for some period of time,” said Julie Kuzmic, Director of Consumer Advocacy with Equifax Canada.

There have not been widespread problems, but there is a chance that some lenders could have mistakenly reported a deferred payment as late.

If they did, an error can have a lasting impact on your credit rating and score. Even a small error on your credit report can have a huge impact on your credit score and in terms of trying to get credit cards, a mortgage, or even a student loan, that can be the difference between getting a good rate, a bad rate, or no loan at all.

Unfortunately, errors on credit reports were happening even before the pandemic, which is why it’s important to check your credit report at least once a year or if you are expecting to apply for credit.

Equifax now allows you to check your credit rating and score online for free. If you find a mistake, you should takes steps to correct it right away.

Errors should be addressed with both credit reporting agencies Equifax and TransUnion. Correcting errors can take time and you may have to send supporting documents so you may need to check back several times to confirm errors have been fixed.

Even if you didn’t use deferred payments it’s still a good idea to check your credit rating and score. Equifax says when you check your own credit information there is no impact on your score number.

Cheers!

So you want to make a major home renovation. Congratulations! Now, you’ve got to find the right contractor for the job. While doing a thorough online search or asking family and friends is an important first step, once you find a potential contractor, it’s time to start treating the process like a job interview. Being prepared with the right questions protects you from future headaches, but also ensures that you’re happy with the end result.

Hiring a contractor for your big home reno? Ask these important questions to make sure you’re picking the right contractor.

1. Do you have a contracting license?
Depending on where you live, there are different requirements for what type of license a contractor has to hold. Check the laws in your region to see what might apply, and ask potential contractors directly whether they hold those licenses.

2. Do you carry the appropriate insurance?
According to the Canadian Homeowner’s Association, hiring people without the proper insurance could put you at legal and financial risk should something happen in your home. Protect yourself (and the workers improving your home) by checking off this box in the beginning, and ensure they have both liability insurance and worker’s compensation.

3. Will we get a written contract?
This should be a given if you’re working with a contractor because if the answer is no, don’t even bother moving forward with the interview. The CHBA says contracts should cover the description of the work, the materials used and the price of the job. You should also take this as an opportunity to figure out your payment schedule, as the Better Business Bureau in the U.S. says that you should never pay the full price of the job upfront, and the specific timeline for completing your project.

Contractors should also always offer a warranty in writing that informs you of what is covered and for how long.

4. What is your experience in home renovation?
This question can help you determine how long the contractor has been in the business, whether they’ve worked with similar challenges as those in your home and how they ensure that projects are completed on time. With this question, you get full insight into their methodology.

You can also find contractors in your area that might have positive Yelp reviews or other social media to see if others are happy with their work.

5. Can we get in touch with your past clients?
A contractor should be proud of their past work. Take this as an opportunity to figure out how contractors approach their work, whether they have effectively handled disputes and fact-check what contractors tell you about their working style.

6. Will you be responsible for building permits?
If there is a chance that your building requires permits, you want to make sure that your contractor is prepared in this area. Square One Insurance says you should try to be present for a contractor’s home inspection to ensure that you fully understand their feedback, and anticipate if any changes in your home need to happen.