Buying a new detached home is one of the biggest investment decisions you will make. And because of the magnitude of the decision, you are bound to get anxious because you really want to get it right. This is especially true for first-time buyers looking for a new home.
Over the past few years, there has been an increase in the demand for new detached homes. And the Covid-19 pandemic has also added fuel to this drive to own single-family homes.
The idea of working from home, for example, has made people see the need for a bigger space. However, because a new home is a significant investment, many people are unsure whether it is a good decision, the current situation notwithstanding.
If you are contemplating buying a new detached home but don’t know whether it’s a good idea, below are a few insights that should help you make an informed decision.
Why Buy A Detached House?
Even with the current pandemic and financial uncertainties, statistics show that many people still feel that owning a house is a good investment decision.
Also, changes in working and lifestyle patterns have made people start moving away from the city, searching for cheaper and more expansive housing options. With remote work becoming increasingly popular, new detached homes now seem like a good idea because they are more spacious and relatively more affordable, especially in the long run.
Even younger people, who would be more attracted to the city, are ditching condos in the city and searching for detached homes in suburban locations. This increased demand for low-rise single-family houses is expected to grow even after the pandemic.
The Cost Factor
Although the demand for new detached homes is there, the cost is a significant barrier to homeownership. New detached homes are relatively expensive compared to other types of housing markets. A unit can cost anywhere from a few hundred thousand dollars to millions of dollars.
Are you in a position to spend that kind of money on a house? Are your savings enough, or will you have to borrow to cover the cost of this huge investment? Whatever option you have, you need to ask yourself whether you are willing and ready to take on this burden.
Fortunately, that should not be a significant concern because of what we are about to tell you next.
Housing Prices And Mortgage Rates Are At An All-Time Low
Despite the surge in demand for new detached homes, the prices have remained static and, in some cases, even gone down steadily. For example, the prices of new detached homes in Pickering are the same or even lower than they were a year or two ago.
It is hard to explain such a conflicting trend in the housing market—even mortgage interest rates are at a historic low. It appears that the increasing demand for single-family homes is being countered by uncertainty about the pandemic and the economy. This has helped to keep the prices and interest rates low.
But how will the rates remain this way? Well, a financial forecast by the Royal Bank of Canada shows that these rates will continue to stay this low for the next few years. This means that servicing a mortgage now is easier than it has ever been. So you can get the house you want on friendly payment terms.
Often people are reluctant to buy new detached homes, not because they don’t want them, but because they can’t afford them. If you are one of those people, affordable mortgage rates could be the solution.
But…How Steady Is Your Income?
Before rushing to invest in a new detached home, you need to establish a stable income. New detached homes can cost quite a fortune. If you have to raise all that money alone, it will leave a significant dent in your wallet.
The financial impact of such an investment may be felt for a long time. So your income should be able to able to absorb such an impact.
However, if you choose to get a mortgage, banks tend to favour those with a steady income stream. Also, remember that if anything happens and you can’t make the monthly payments, there is the risk of defaulting and foreclosure. Therefore, ensure that you get your numbers right so that your new home doesn’t become a burden too significant to bear.
However, if income stability is not an issue, buying a new detached home is one of the best things you will do for yourself and your family.
Getting The Right Mortgage Lender Goes A Long Way
As with any other significant investment in your life, you need the right financial partner if you don’t want to regret buying a new detached home.
Please note that not all mortgage lenders have rates well-suited to the purchase of a new detached home. So the kind of lender you get will determine whether this will be a good idea or not.
And because it is a lifetime decision, take your time to shop around for the mortgage that fits your specific needs. You can now do this online because most banks and other lending institutions have digitized their services.
Alternatively, you can go through a mortgage broker. Most brokers have a relationship with multiple lenders and are, therefore, in an excellent position to know which lender would be the best for you.
Are Your Goals Short-term or Long-term?
Before buying that new detached home, you need to think about your goals first? Is it a dream home for your family? Or is it for investment purposes? Also, do you plan to move to the house for long-term living, or is it a second home?
If it is for investment purposes, you need to get a few things right. First, ensure the market you are in is a buyer’s market and not a seller’s market. In a buyer’s market, prices are relatively high because there are more houses than buyers.
In a seller’s market, bidding wars may push the prices so high, to the point that your new detached home would become too expensive.
But if the house is for long-term living, it is essential to consider other things like the interest rate, down payment, and closing costs. The stability of the housing market matters too. Buying a new detached home in a volatile housing market is a bad idea and could cripple you financially.
Finally, Where Are You Looking to Buy?
If you’re interested in buying a new detached home, choice of physical location and housing market matters.
To start with, get a house in a prime location if you want to secure your investment. Buying new detached homes in Brampton would be a worthy investment because it is a rapidly growing city. This also means that the value of your investment can only appreciate.
It is best to work with a local real estate agent who can hold your hand and help you avoid pitfalls that may render purchases useless.
Although agents usually do not deal directly with the sale of new homes, they are in a position to furnish you with all the information and facts you need to make a good decision.