Frequently Asked Questions: Buyers

Buying a home is one of the biggest purchases a person does in their lifetime. Because it is such a large purchase, there are a lot of legalities involved and steps to complete from start to close. We have compiled a list of the most common questions we receive from our buyers here to help you have the information available to succeed!

Should I talk to my bank before looking at homes?

Talking to your bank or mortgage broker should always be the first step in the home-buying process. Getting pre-approved before home shopping will make the entire process run smoother: you will have a budget for what you can afford, you will be able to keep realistic expectations, you will seem serious to both sellers and real estate agents, your offer will more likely to be accepted, you will meet your conditions dates with ease and it helps you budget for your closing costs. We believe that it is almost impossible to seriously shop for a home without pre-approval. If you do, you may fall in love with a property you cannot afford, or have a hard time getting an offer accepted. If you do not already have a mortgage broker, we recommend working with our trusted partner, Neil Keeping at The Mortgage Group!

How much does it cost to work with a real estate agent?

Your real estate agent is paid for their services by splitting a percentage of the sold price of the home with the seller’s agent. Therefore, when you purchase your home, you do not owe your REALTOR® any money directly. In simple terms, when you are shopping for a home, the price you pay for your new home includes your REALTOR®’s fees, so you do not have to set aside extra money to pay your agent.

How many homes should I look at submitting an offer?

There is no set number of homes you should view before submitting an offer. Some fall in love with the first home they see, while others can take years to find the right one. According to realtor.com, the average buyer will view 10 properties before they submit an offer, but the site notes that this number varies greatly. Since COVID-19 began, there has been a large surge in virtual tours and searching for homes online. This allows buyers to see more homes than ever before. It’s always a great idea to inform your REALTOR® of your critical wants and needs in your future home, so they can use their professional resources to find homes that match your criteria. This will save you time in the long run and allow you to view a few great homes instead of tens of “okay” ones. 

How do I make an offer?

When you find the home of your dreams, it's time to make an offer. Your real estate agent will prepare the documents necessary to submit an offer. Your agent will require your legal name, the amount you wish to offer, what will be included in the purchase price, the date you would like to close the sale, the documents you need to review before finalizing the deal, and when you would like to leave the offer open until. You will also need to be prepared to make a deposit on the home. The deposit goes against your closing costs and downpayment. This deposit is cashed upon delivery to the listing brokerage, so, make sure you only offer a deposit you can afford. Your REALTOR® will work with you to ensure you have the best price, and conditions and review the necessary documents needed for a successful sale. If you are not satisfied with something that arises with the home, your REALTOR® can, later on, negotiate a price reduction, repairs to counter the issues or terminate the deal. 

How long does the seller have to respond to my offer?

You and your real estate agent will decide on an amount of time in which the offer is “live”. The seller’s agent may request that, for example, all offers be left open for 24 hours. It is usually best practice to follow what the seller’s agent requests. You are technically allowed to go against the seller’s request, but it may lower your chances of your offer being accepted. Your REALTOR® will advise you on the best “timeline” for the offer so that you have the best chance of success.

What if my offer is rejected?

It is never a good feeling to hear that your offer was rejected, however, in the current market we are experiencing in Halifax, this is often the case. In a competitive seller’s market, buyers typically have to go through the offer process a few times on a few different homes before getting one accepted. Your offer may have been rejected due to the sellers receiving a higher offer, the sellers believing your deposit was not enough, due to you stating too many conditions, etc. There is no penalty to you if your offer gets rejected, you just have to keep on with your home search. If the seller rejects your offer and has not accepted any other offer, your REALTOR® can then find out why your offer was rejected and can help you prepare a new one that corrects the issue. 

What happens after my offer has been accepted?

After your offer has been accepted, you need to meet the conditions that you specified in the agreement. You must provide your deposit, secure your financing with your bank, perform a home inspection if indicated (your REALTOR® will arrange this, however, it is at an extra cost to you), notify your lawyer, and book your pre-closing walkthrough. When you work with a real estate agent, they will be by your side through most of this and inform you of deadlines. They can forward documents to your banker and lawyer for you, and supervise the inspection too. There are a lot of moving parts to make it to the finish line, but having a REALTOR® on your side keeps things flowing and organized. It is in your and your REALTOR’s® best interest that you meet all of your conditions.

If you have any questions that didn’t make this list. Be sure to reach out! We would be happy to help you succeed in buying Halifax Real Estate!

Author: Jordan Gunn
Licensed Real Estate Assistant
The Andrew Perkins Real Estate Team
Keller Williams Select Realty

Should you refinance your mortgage?

In 2020, we all spent a lot of time at home, and this has given a lot of us time to reconsider our financial situations. With the hit that the economy has taken due to the spread of COVID 19, it is important now more than ever to reduce your debt and curb your spending. Save your money and spend it wisely, like with investments that will pay off in the future.

Many have already realized this, which is why the real estate market has been booming. More and more buyers are eager to put their money into something that will reap rewards down the road. We can see from the Halifax real estate market statistics, that buying Halifax real estate will do just that.

This past year, mortgage rates in the area, and all over North America have dipped. This is not only a great opportunity for first-time home buyers but also for current homeowners, as there is always the option to refinance your mortgage. 

So instead of paying more than you need on interest for your mortgage, why not evaluate whether you are in the position to refinance for a lower interest rate?

Refinancing your mortgage means that you are breaking your mortgage to start a new one. This can be done with your current lender or even a new one. Before you jump in, it’s good to note that breaking a mortgage comes with a financial penalty. Always make sure that the savings that occur with refinancing are greater than the penalty.

The decision to refinance is a very personal one and takes into account many different factors. Let's dig into the factors that if applicable to you, would mean that refinancing is a good option.

The most obvious reason homeowners refinance is due to lower interest rates. An example that Investopedia gives states that if you took out a mortgage of $300,000 with a 6% interest rate, and that rate now can drop to 4.5%, you could save approximately 280$ on monthly payments.

If you are planning to own your home for a while, then refinancing would be a good option. If you are not, you may not end up saving money as you will need to pay a financial penalty for breaking your mortgage.

Homeowners also chose to refinance to access equity. When you refinance, the lender will offer you a loan of 80% of the appraised value of your home, less the debt you currently owe. This can mean extra cash for you to use for other investments, to consolidate debt, or to put towards a downpayment on a second property. If you are doing this, your mortgage monthly payments will increase based on the amount that you borrow.

Another reason that homeowners refinance is to switch their adjustable-rate mortgage to a secure fixed-rate. You may want to do this if your lender is offering historically low rates and you wish to lock in that rate for the remainder of your mortgage. No homeowner ever wants to see drastic increases in their monthly payments due to a spike in mortgage rates. There is always the potential for this to occur when you are locked into an adjustable-rate mortgage.

Homeowners may also want to refinance if their credit score has improved since they took out their first loan. If your credit score was not great when you first applied for your mortgage, the lender may have added a higher interest rate. If your credit score has increased since then, lenders will assume that you can pay back your loan more reliably, and thus you are less of a risk for them to take on as a client. This can score you some seriously lower interest rates! 

f you are in a situation where you would like your monthly mortgage payments to be lower than they currently are, refinancing may be for you. If there is not a lower mortgage rate to achieve this, you can refinance for a longer-term. You should know, extending your loan only makes sense if you desperately need to make lower payments. This will not save you money in the long term, as you will end up paying more in interest, but may help ease the burden in the meantime.

Things to remember when shopping around for refinancing options...

It's important to approach a few different lenders when thinking about refinancing, as each lender will offer a different rate. Like any big purchase, you want to ensure you know all of your options to score the best deal.

It may seem easiest to simply go online and use a free estimate generator. You should know, these are rarely accurate. In this way, you also have no control over where your information goes. We recommend always approaching lenders directly so that your information is secure, and you get the most accurate estimates to evaluate. 

You can also reach out to a mortgage broker, who will do most of the heavy lifting for you. Mortgage brokers are professionals who will compile information for you from multiple lenders to provide you with your best options. We always recommend Shawna Snair with Premiere Mortgage Centre to our clients!

The bottom line is, refinancing ultimately depends on your unique situation. A good rule of thumb is that if you're savings from a lower interest rate or better credit score outweighs the costs that will come with refinancing, then it is a good idea look into it. 

Experts are predicting that mortgage rates may begin to rise again midway through 2021, meaning there is no time like the present to consider refinancing.

Rate Hub does a great job at summarizing the pros and cons of refinancing in the chart below:

Table Source: Rate Hub: Mortgage Refinance. 2020

If you wish to chat more about mortgage tips, reach out!

Cheers, 

Andrew

902-488-0012

andrew@andrewperkins.ca