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  • Writer's pictureJabari Banza Monga

Buying A House in 2023: Right Timing?



Good news: Prices will drop

Housing prices have been very expensive one of the pandemic... And It was a huge housing bubble!

Over time though, the market started to correct itself (finally) and now you can get houses for a lot cheaper than you could before.

If you are a real estate investor like me, now is the best time to dig your toes and start making some real money in the real estate game.

While you may be forced to eat temporary losses, that come with buying a property in this climate.

Just don't overlook the fact that if you're investing in the right location then you'll be fine.

Make sure you look for undervalued properties that are near:

  1. Thriving job markets

  2. University towns

  3. Growing population

  4. Natural landmarks

The only place that humans naturally want to socialize is the best place to purchase real estate and dough for five years.


Now we got the main just out of the way let's talk more about the actual mortgage process so you can ensure solvency when doing these real estate deals!


Watch The Video Here



Is the mortgage climate good right now?


Whether you're buying a home or refinancing, one of the most important decisions you'll make is which type of mortgage to choose – fixed or variable!

If you get this wrong... You're risking everything:

  • Your house

  • Your lifestyle

  • Your credit

  • Even... your marriage in some cases

Knowing the right mortgage setup is #1 to evaluating whether or not it's the right climate to buy a house for you.

I've bought and flipped so many houses AND I am a licensed Ontario realtor so I know a thing or two.

So what is the difference?

Fixed mortgages offer stability and predictability, while variable mortgages offer the potential for lower rates and payments over time.

Both have their pros and cons, so it's important to research and understand the options before you make a decision.

This guide will explain the differences between fixed and variable mortgages, so you can make the best choice for your situation!


Overview of fixed mortgages

A fixed mortgage is a loan with a set interest rate and monthly payment throughout the term of the loan.

Typically, the term of a fixed mortgage is five years or longer.

Canada sadly forces you to reset after 5 years... But in the US it goes to 30+ years.

Another thing that the Yankees got!

The advantages of a fixed-rate mortgage include lower monthly mortgage payments and the predictability that comes with the certainty of your payments.

If the world goes to crap? You're still good at the same rate!

Assuming you had a fixed mortgage before the pandemic, you most likely didn't have to go through the margin calls and pain of shifting markets.

The disadvantages of a fixed-rate mortgage are that mortgage rates are often higher than rates for a variable-rate mortgage, and you may be unable to refinance at a lower rate if rates decrease.

Guess you win some and lose some, eh?


It's best to get a fixed-rate mortgage when the market is good.


Variable mortgages: the destroyer of livelihoods


A variable-rate mortgage has an interest rate that may change over time.


The interest rate for a VRM depends primarily on the current rates of U.S. Treasury securities and government-backed bonds that are used as the standard for measuring interest rates.

So basically... Mr Market.


The advantages of a VRM are that you may be able to get a lower initial rate than a fixed-rate mortgage, and your monthly payments will be lower if interest rates fall.

That being said, if you can JUST BARELY scrap enough income to qualify I do not recommend it.

All it takes is one small civil unrest to double your payments, forcing you to sometimes go bankrupt/default.

It ain't pretty... Happened in 2008 - can happen again.


Conclusion

Consider these questions:

  • Will rates rise or fall over the next few years?

  • How will changes in interest rates affect your monthly payments?

  • Do you have a financial cushion if rates rise and your payments increase?

  • How long do you plan to keep the home?

Even I, as a millionaire - still consider these things dearly.

You should also consider things like your credit score, the interest rate you qualify for and whether you can afford a higher monthly payment if rates rise.

Stay prudent, and happy house hunting!





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