By Paul Hudson
Published: Feb. 05, 2014
Since I moved to Squamish in 2004, I have notice my phone rings at a higher pace after we bid farewell to Blue Monday. Dubbed the most depressing day of the year, the third Monday of January appears to happily coincide with the unofficial kick-off to the Spring real estate season in Squamish.
With real estate inventory down 17 percent and rental payments up 30 per cent, demand for home ownership continues to increase in the New Year.
What does this means if a home purchase in Squamish is on your 2014 radar? In short, you must prepare yourself as early as possible.
When competing for the purchase of a quality home, the smartest things you can do is have a sound financial plan.
When purchasing real estate in Squamish, three key elements to your financial plan are: determining your income, working with local professionals, and ensuring you are completely preapproved for your mortgage.
1) Determining Your Income – for many of us, income can vary from year to year. Depending on the financial institution you work with, you can work this to your advantage.
For example if your income increased in 2013 or you received a pay raise in early 2014 ensuring the financial institution will accept your most recent income increase (rather than averaging you past two or three years) can be the difference between financing the home you want or settling for less. This strategy tends to be of greater significance to those who are self employed or received bonuses, commissions and overtime income. On the other hand, if your income is temporarily lower, previous years’ tax returns may be factored if you purchase prior to the end of June, typically.
2) Working With Local Professionals – where you buy plays a significant role in how you budget (whether budgeting time or money). For example a local realtor will not only find you the best fit for your housing needs but also bring to light which neighbourhood works best for your situation. Perhaps a slightly larger home in Valleycliffe works better for the North Vancouver commuter while a smaller home in Garibaldi Highlands works better if a school location for your children is a priority.
Since local mortgage advisors work with realtors daily, a recommendation to a professional who knows the dynamics of the local market will help you make a financially sound choice when buying.
3) Ensuring You Are “Completely” Preapproved – Although it’s easy to log onto a bank’s website, locate a mortgage calculator, punch in your income and received a number stating what you can afford, this is far from being pre-approved. Being the financial equivalent of WebMD, your bank’s mortgage calculator only gives you an indication of what you may have.
Expense add-backs, government restrictions, variable amortizations and your credit rating are just a few examples of what can significantly skew your estimated pre-approval amount by $100,000 or more.
To be financially savvy I always recommend you have a solid financial plan. Knowing you are completely pre-approved in advance of shopping for real estate puts you in a competitive power-position, particularly in times of scarcity.
