Why is Everyone Getting Pre-Approved During The COVID-19 Pandemic?
During the pandemic for COVID-19, I have been getting a huge number of inquiries for pre-approvals and clients wondering if they should purchase soon. But why? Why pull the trigger during such this COVID-19 recession?
There are two main reasons:
Historically low interest rates
Prediction that real estate prices will drop between 12%-18% within a 12 month period
How does it benefit you as a home buyer?
It lets you know how much you can afford. Is your income high enough for your purchase price?
Secure your interest rate - interest rates can go up or down. Getting pre-approved will help you secure your low rate for 60 - 120 days. If interest rates still keep getting lower, you will still get the lowest rate
Overview on the home buying process - have the opportunity to know how much your monthly payments may be, how much do you need for closing costs, what's the difference between putting 5% and 20% down payment.
Current Client Scenario:
I'm currently help person A and B with their home buying process. Both are recent graduates from UBC. Person A is currently work as a business coordinator and person B has been working as a IT technician for the last 8 months. They just became recently engaged and wish to buy an apartment together. They are currently renting an a basement suite in Burnaby for $1,800 a month.
Each has saved up a total of $14,000 each with a total of $28,000
Person A makes $37,000/year
Person B makes $43,000/year
Total Income of $80,000/year
They are both first time home buyers
What were their main concerns?
Is it going to be more expensive monthly to own this apartment?
How much is their insurance premium going to be?
Should they purchase their house soon or wait for rates to change more?
Maximum purchase price of $444,000
Monthly Payments: 1,887.40
This calculation considers a monthly payment of $250/month for strata, $1,500/year in property tax, $50/month for heating
CMHC insurance premium is built into the monthly payments
Answers for clients concerns
It will be just slightly more expensive, but it will be your home.
Insurance premium will be approximately $16,000. However, this is built into your mortgage. The cost of this premium is about 8-9 months of rent. To save up an additional $66,600 can easily take 3-5 years to save.
The clients were looking to close in September. Anytime from now till the closing date will let them receive the lowest rate from the bank. The rate received so far was 2.09% at one of the big 5 banks.
How do I get started?
Getting pre-approved is one of the easiest ways to get started with the home buying process. To get pre-approved:
Contact your mortgage broker
Fill out an application form.
Get approved in under 48 hours.
Please feel free to contact me at any time. I'm more than happy to help with all your questions and concerns with no obligations.
I understand that some people aren't unsure of their directions for home buying and want to inquire remotely. Feel free to contact me via email.
If you would like to call or meet up for a coffee. I'm more than happy to set up a time.