Thunder Bay – Don’t Make the Same Mistake in 2015

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Thunder Bay Real Estate and Mortgage Planning
Thunder Bay Real Estate
Real Estate Home sales
Thunder Bay remains a seller’s market for real estate. Waiting can mean higher prices down the road.

Real Estate Market in Thunder Bay Remains Hot

THUNDER BAY – Real Estate – “2014 will continue to be another great year to buy real estate. With interest rates expecting to stay low for the near future coupled with short inventory and a healthy rising appreciation – the time is now!,” shares RE/MAX Broker Vince Mirabelli.

Vince Mirabelli
Vince Mirabelli

“Every year people always say to me they should of bought a year or two or three ago,” comments Mirabelli. “Well don’t make the same mistake this year. Jump into the heated pool head first. Don’t be one in the crowd who says in 2015 they should of bought in 2014”.

Planning Your New Home Purchase

Fixed Mortgage Rates: Up: Fixed mortgage rates are expected to creep moderately higher this month, as bond yields are pushed up by markets reacting to the first installment of the U.S. taper. A seasonally slow winter market suggests lenders may wait until the more active spring season to discount their fixed rate offerings.

Variable Mortgage Rates: Unchanged: Canada’s inflation rate remains below expectation, and other growth factors such as exports and business investment fail to improve enough to mend the gap. Until these factors rebound, and until there is sustained economic improvement in the U.S., the Bank of Canada is not anticipated to increase the Overnight Lending Rate.

For prospective home owners, one of the key pieces is a mortgage.

Nathan Lawrence SHIFT President
Nathan Lawrence

Nathan Lawrence, Mortgage Broker with Dominion Lending Centres Lakehead Financial explains some of the information a new home owner needs to know.

Sencia Canada“Factors such as interest rates can play a significant role in a house hunter’s decision to move forward with a potential real estate purchase. In addition, uncertainty with how the interest rates are going to react to market changes over the next few years can be a cause for concern. Looking forward into the Spring Market, the best thing any potential home buyer can do, is to take steps to educate themselves about interest rate trends and projections, lender guidelines, pre-payment penalties and the local real estate market itself,” explains Lawrence.

“Purchasing real estate in any market is not a risk free venture, there are always potential risks that come with buying a property which can include changes in potential resale values, interest rate changes, unexpected costs and repairs. Educating yourself as a purchaser helps to mitigate those potential risks and reduces the chances that you will be impacted by changing market conditions. You cannot control everything, so the next best step is to be prepared”.

Funding Your New Home Purchase

Lawrence says the type of property will determine your planning.

“The first step in this process is understanding your plans for the property and your personal goals for the future. Is the property being purchased as a home for you and your family? Are you buying a rental property? Or maybe you are hoping that you can live in the home and rent out a separate living unit. By asking yourself these questions and by working with a realtor that understands the market, city by-laws and the landlord tenants act you can avoid potential challenges that you might face if you were to later discover the ‘rental unit’ in the basement does not meet the City By-laws”.

“These types of late discoveries could result in additional costs to renovate the unit or a loss of rental income for a period of time. These are also important details that your licensed Mortgage Agent/Broker will be interested in knowing”.

What is the ‘Best Rate’?

“Many buyers rush right to the best 5 year fixed rate, without taking a proper look at their plans for the property, potential penalties and the different lender guidelines at each mortgage lender,” says Lawrence. “In many cases the best 5 year fixed rate might be your best option, but it is important to understand what other term lengths and variable products are available to you. Rushing to a decision at the onset, might lead to high pre-payment penalties if you need to get out of the mortgage early”.

“Many home buyers are so caught up in the excitement of purchasing a home”, comments Lawrence. ” They sometimes do not take the time to discuss their plans for the futures. Understanding your personal plans can help you purchase the right home and get the best mortgage for their personal situation”.

Take the Needed Time to Plan

A Licensed Mortgage Agent should take the time to speak with you about your plans.

    • How long do you intend to own the home for?
    • Will there be a need for any other large expenditures in the future (i.e. car, child’s education, etc.)?
    • Are you likely to be transferred out of town for work?
    • Are there any improvements planned for the property?
    • Based on your family plans, will you need to upgrade to a new home within a specific time frame?

Getting the Answers

Having answers to questions like these will help your Licensed Mortgage Agent/Broker better recommend a mortgage product for you that will get you the best cost of borrowing, while balancing your plans for the futures and potential pre-payment penalties or other mortgage flexibilities like additional lump sum payments, double payment options or skip-a-payment options.

“In closing, take the time to reflect on what you are looking for from your potential purchase and know what your personal plans are,” says Lawrence.

Personal Budget Planning

Next, do a personal budget so that you understand what you feel comfortable making in mortgage payments, property tax payments and utility payments. When you’re ready, find a Real Estate Agent/Broker and Mortgage Agent/Broker to work with throughout the process. These professionals should take the time to understand your needs, plans and goals. Ask friends and family for recommendations, do your research online, and have an initial meeting with them so you can meet face to face. You want to make sure that you are working with a professional that you trust and feel comfortable working with. A house purchase is the largest single investment that the average Canadian makes during their life time, so take the time to protect that investment by doing your legwork and by working with the right people.

Thunder Bay Market Banner Year Coming

While 2014 is anticipated to be a banner year for Canadian economic growth, it’s too soon to know when such improvements will be realized – the Bank of Canada is likely to stick with its current monetary policy strategy until real progress is made. While external factors, such as the U.S. taper, are currently having an upward effect on fixed rates, it is unclear what the long term implications will be.

The market in Thunder Bay continues to be very hot. There is upward pressure on home prices. New home construction is remaining fairly stable. That is a part of how many homes for sale are generating the market pressure on prices.

Mirabelli concludes, “With a healthy real estate market in Thunder Bay, we are poised for another banner year. As one of Canada’s most stable markets expect to see some great values out there”.

Your 2014 might include a new home. Taking the time to talk with professionals will ensure that move is a step along the path of your personal success.

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