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  • Writer's pictureTeam Pinto

What Second Time Waterloo Region Homebuyers Need to Know

There are hundreds of articles aimed at first-time house buyers that give them everything they need to know about buying their first Waterloo Region home. We have written extensively on the subject here. For good reason. First time homebuyers are often lost, stressed out and need a lot of help.

Being a first-time home buyer is difficult enough, but being a second-time home buyer is not always easy either.

While you'll probably go into your search knowing a lot more about the difficulties and expenses of buying real estate, you'll also be covering new ground.

That new territory includes things like figuring out how to sell your first property and saving for a down payment without being eligible for the incentives or programs that were available to you when you bought your first home.

Here’s a rundown of just a few of the things that you might find different the second time around.

You'll Have Equity Available This Time

When you were buying your current (first) home, you might have had to scrounge to find the money for a down payment. When buying a second home, that might not be necessary.

That’s because you won’t just have equity in your home from your first down payment but, depending on how long you’ve owned your home and the market, you could also have paid off a significant chunk of your mortgage or your home might have increased in value.

That could be enough to pay a 20 per cent deposit on your next place – which would mean that you could forgo costly mortgage insurance and save money. Of course, if you are buying a home that’s significantly more expensive, then you might still need to scrounge a little and pay for the mortgage insurance. It just depends on what kind of home you’re looking for and what your current mortgage and financial situation looks like.

You’ll Have a Waterloo Region Home to Sell

Making a down payment on your next place could be more difficult if you haven’t already sold your first house. In fact, coordinating selling and buying property might feel a bit like being an air traffic controller. But an inexperienced one who might just cause a huge accident.

While in the past, many people would make an offer on a house that was contingent on selling their current home, that’s not always possible to do anymore with home selllers and real estate markets that give those who are able to make unconditional offers an advantage.

In addition, negotiating for a conditional offer could mean that you have to pay a bit of a premium when it comes to price. For that reason, many real estate agents suggest that you sell your first home before you purchase your second.

Whether to sell or buy first is a decision that you’ll have to make depending on how motivated you are to leave your current place, your financial situation, and what the market in your neighbourhood looks like.

If you don’t want to wait to sell your place in order to purchase your home, you might want to do everything you need to do to get it ready for sale such as staging or making repairs, or even put it up on the market while you’re shopping for your second home. Bridge financing could potentially help you if you end up owning two homes. Just make sure that you qualify for it before you plan to use it as a solution.

You’ll Still Need to Get Pre-Qualified for a Mortgage

While you might think that you know how much of a mortgage you’ll be able to qualify for and what kind of rates you’ll be eligible for based on your current mortgage, the lending environment, your credit or your income could have changed significantly. Interest rates could have gone up in the interim - in fact, in the current climate they almost certainly have - or you might have changed jobs.

Changing jobs could affect how much of a mortgage you can qualify for, especially if you’ve decided to start a business or freelance full-time. In that case, you’ll have to prove your income through several years of tax returns. If you don’t have returns because you’ve recently left your full-time gig, you could find it difficult to qualify for a mortgage or end up paying significantly more in interest.

Another reason why it’s critical to get pre-qualified for a mortgage before you set out searching for a home is that it’s good to know exactly what you qualify for before you get your sights set on something that’s above your price range.

You Won’t Get Any More Extra First Time Buyer Financial Help

If you benefited from things like the Home Buyer’s Plan, which allows you to withdraw funds from your RRSP to purchase a first home in the Waterloo Region, the land transfer tax rebate for first-time buyers, or claimed the Home Buyer’s Tax Credit when you bought your first place, unfortunately they won’t be available to you for the purchase of your second home. That means buying your new place will be more expensive, and it could be more difficult to get the money together for your purchase.

You’ll Know More About What You Want in a Home

One of the advantages of buying a second home is that you are already aware of the process and many of the the costs involved. You also will know better what you want in the house.

Did the last seller convince you to skip the house inspection because there were multiple offers, and then you later found issues? You’ll be more likely to check everything out to make sure that the roof isn’t going to give out three months after you move in, like it did with your first home. You will probably also already know some realtors that you will want to work with for your home sale and home search.

Buying a second home is different but also the same as buying your first. Use the wisdom you gained from your first experience and take advantage of this experience to gain some more. It will come in handy if you ever find yourself a third-time home buyer.

And don't forget, a great local real estate agent will still be one of the keys to your real estate success, no matter how many times you have shopped for a new Waterloo Region home.

Getting ready to buy a new Waterloo Region home, and/or sell the one you own? Let Team Pinto use their huge local real estate experience and expertise to help you. Contact the award-winning Team Pinto here, or book a free Zoom consultation to discuss your unique Waterloo Region real estate needs here.

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