This past year our news and media has been flooded with COVID-19 facts and fears. The pandemic has brought many challenges to the Canadian economy and with that came record-breaking lows for mortgage rates. As 2021 approaches, we are seeing shifts in the industry once again. Rates are beginning to stabilize and restrictions to curb the spread of this virus are being increased and extended. So, what does all this mean for you, a home buyer? We have broken down the most important tips to make buying a home in today’s crazy world that much easier for you!

Be Prepared

If you know you will be wanting to purchase a home in the coming months, getting your documentation organized ahead of time will ensure your Mortgage Broker can provide you with a pre-qualified budget early on. The current pandemic market means time is of the essence on every new mortgage application. Mortgage Lenders are experiencing an extreme influx of applications which results in delays for them to approve files because demand is so high. By getting pre-qualified ahead of time, you can house hunt, get an accepted offer, and have your Mortgage Broker secure financing much quicker because they will have your documentation on hand and ready to submit to a lender for approval faster than if we have no documents on file.

To get pre-qualified, you need to complete an application with your Mortgage Broker and provide documentation to your Broker proving your income and liabilities up front.  Depending on your employment situation, the documents you need to supply will vary. If you are salary or hourly employed, your required documentation could include your most recent two years of T4s, as well as a letter of employment, your most recent paystub, and photo ID. If you are self-employed, your required documentation could include your most recent two years of full T1 General Packages, most recent two years of Notices of Assessment from the Canada Revenue Agency, most recent two years of business financials and articles of incorporation if applicable, and photo ID. If you are an existing homeowner, you will also need to provide the most recent year’s property tax notice and BC assessment notice, the most recent mortgage statement, and any lease agreement(s) or sale agreement for that property if applicable. Almost all files will require some kind of tax documentation, so even though the CRA made extensions to tax filing deadlines due to the pandemic, be sure you are filing your taxes well in advance of starting your home buying process. Also, we understand that every situation is different, so if you would like to know what documents you need to collect for pre-qualification, please contact us directly to discuss your application. Our team can pre-qualify you in as little as a few days, depending on how quickly you collect and send in your documents.

The other documentation that you should be organizing ahead of time is the proof of your down payment and closing costs. Almost all Mortgage Lenders require 90-day history of bank statements to prove your down payment and closing costs if you are not receiving them in the form of a gift from an immediate family member or a sale of an existing home. If you are saving your down payment, it can be useful to have one bank account chosen to save the funds in, rather than multiple accounts. It is also important to ensure that you are making consistent and regular deposits into that account so that you can prove you have saved your down payment and closing costs over time. A good example would be to transfer small amounts from every pay cheque into your down payment account, rather than depositing very large sums less often. All large deposits must be verified, so ensuring your bank statements are organized will save a lot of time when it comes to getting your financing approved.

Be Specific

After you have been pre-qualified with a budget, you can begin house hunting. The British Columbia Real Estate Association (BCREA) states that the COVID-19 pandemic and associated recession have impacted housing markets in unexpected and unpredictable ways. Last month, Nanaimo saw a 33% increase in homes sold on MLS listed properties compared to November 2019, according to VIREB. They have reported that throughout the year, drops in home sales has occurred, but it is mainly due to a lack of homes for sale, not a lack of demand. The biggest driving factors to the high demand in home sales is because of the record-low mortgage rates and a recovering economy.

So how can you ensure you buy a home when demand is high, and supply is low? We recommend working with a Buyer’s Agent. Purchasing a home privately can seem like the most affordable option but is not always the best option for you. It is important to note that buyers usually do not pay any commission directly to their agents. The buyer's agent commission is paid by the seller after the real estate transaction closes.

Finding a Buyer’s Agent that you connect with is very important. Depending on your needs, you may need to meet a few different Agent’s before selecting the right person to work for you. Your Mortgage Broker is a fantastic source to make recommendations to you. We will know many professionals in the industry and can match you to your perfect Agent to ensure your needs are met.

Once you have found the right Buyer’s Agent for you, they will work with you to get a clear understanding of what you are looking for in terms of your new home. Be as specific as possible and ensure you categorize what are “Must Haves”, and what are “Negotiables”. The current market’s high demand means the faster you can act, the better, so by having a clear idea of what you are looking for, your Agent will be able to weed out properties that do not fit your needs. When sharing your list of needs to your Buyer’s Agent, be sure to clearly communicate your pre-qualified budget with them. If you are unsure how to do this, connect your Buyer’s Agent to your Mortgage Broker. This will ensure that you are only considering properties that fit in your budget.

One of the biggest changes to house hunting because of the pandemic is how you view the property. Because of COVID-19 restrictions, many properties are available for video-call viewing only. Others will require masks, and you may be required to enter alone, or asked not to touch anything in the home. These changes can cause problems for you down the road because you may not be able to be as thorough when looking at all aspects of your potential new home. It is important that when house hunting during the pandemic, you take as many safe steps as possible, while also ensuring you are being as thorough as you need to be. Having a Buyer’s Agent that you trust will make a big difference when video-calling to view the property. Have your Agent walk through and look at everything you would personally touch/look at if you could be there yourself. If you are walking through in-person, ask if you can touch/inspect the home if you wear gloves. If you are allowed, then wear gloves and check all aspects of the home that are important to you. Imagine buying a home that you couldn’t touch prior to you moving in. Perhaps the doors don’t open all the way or the taps drip after being turned on. A home is one of the largest purchases you will make in your lifetime, so make sure that you are feel comfortable with all aspects of the home, even if you can’t view it in the way you anticipated.  

Be Patient

Being prepared to move quickly is one of the biggest challenges to purchasing a home in today’s pandemic market. However, ensuring you have enough time to complete the sale is also very important. A common cliché that is very fitting to home buying today is “hurry up and wait”. You need to be prepared to act quickly, make an offer, and get it accepted without delays, but you also need to allow for enough time for your Mortgage Broker to secure financing and for your lawyer to complete the sale for you. There are two major areas that need patience and time: condition to financing removal date, and closing date.

As we mentioned above, Mortgage Lenders are unable to process approvals as fast as they used to in a pre-pandemic industry. Some lenders will not even look at the file if they do not have a full 10 business days between the date of submission and the subject removal date. It is important for you to advise your Buyer’s Agent to give your offer a long enough subject removal to secure your financing. If you are concerned about how much time is enough, have your Broker advise on when you need the subject removal date to be. Your Broker will then work for you to get you an approval as fast as possible. Be patient throughout the process because there are many steps along the way that take time, and most lenders take 1-3 business days to review documents from when they are received from the Broker.

When it comes to selecting a closing date, you and/or the seller may want as soon as possible. However, once your subject to financing has been cleared, there is still several steps to the process that take time to be completed. Your lawyer/notary needs to wait for the lender to send them financing instructions to complete the sale. This can take anywhere from 2-5 business days depending on the volumes Mortgage Lenders are experiencing at the time. Also, your lawyer/notary needs enough time to process your file and have you come in to sign all the documents. Pre-pandemic, this meant your closing date should typically be no less than 2 weeks after your subject removal date. But because of the pandemic demand for home purchasing, lawyers/notaries are needing more time than normal because they have so many appointments spaced less frequently to ensure proper cleaning and distancing. Having your closing date 3+ weeks after your subject removal date will ensure they have enough time to complete your purchase.

Overall, finding the perfect subject removal and closing date to secure your financing and completing your purchase, while also appeasing the seller so that your offer gets accepted can feel like a balancing act. The time it takes throughout your approval process doesn’t necessarily mean you won’t get financing; it just means you need to be patient. Be sure to communicate with the professionals working on your behalf at every step of the process and ask questions if you need more information. Your Mortgage Broker, your Buyer’s Agent, and your Lawyer/Notary have been surviving the COVID-19 storm since it began. We are all here to do whatever we can to ensure you get the outcome you are looking for - a new home!