Historically low mortgage rates are encouraging more people to enter the real estate market. While rates are important when it comes to buying a home, there are more questions first-time home buyers need to ask before they purchase.
The easiest thing to compare when shopping for a first mortgage is rates, but Ryan Mckinley, Vancity mortgage development manager, said they aren't the most important thing. "Depending on how often people move or change jobs, you're not necessarily going to be in that mortgage for the entire term," said Mckinley. "While it seems like you are getting the best deal for you, you need to ask what the penalty will be if you break that term." According to Mckinley, there are two standard penalties that are charged: A three-month interest penalty which is fairly straightforward, as well as an interest rate differential. The penalties can be applied in different ways and by using different numbers. Even though many homeowners may feel as if they will just be giving money to the bank, Mckinley said it's important to ask about the whole package, which could include profit-sharing options at credit unions. A common mistake first-time home buyers make when they head into the market is being unaware of the impact of their unsecured debts, like car loans and leases. "It's really interesting because you see the car commercials and they say $350 a month over a five-year period. It seems affordable, but you are using the same money that you need to qualify for a mortgage," said Mckinley. "For example, if you're making $70,000 a year and you don't have many other unsecured debts you can afford about a $350,000 mortgage. If you then take on a $500-a-month car loan or car lease payment, the $350,000 you could have been approved for before has now reduced to $250,000." Having a full picture of what you can afford compared to what you qualify for is important before a first-time homeowner pens the deal on a new home. Mckinley said the fear of being mortgage poor can be avoided by doing some simple budgeting and planning before you purchase. "When you sit down with the professional you're working with calculate what the total cost is going to be, which could include your new mortgage, strata fees, property taxes and anything else you aren't paying now," he said. "Find out what that total number is and compare that to the rent you may be paying now. Take that difference and start an automatic payment each month coming from your account that goes into a savings account so you can live with it each month to see what it is like to have those payments and see if it is comfortable. "That does two things: Allowing you to know what it is like and creating a cushion for moving expenses." According to Mckinley, first-time homeowners now more than ever are seeking assistance from their parents to help enter the real estate market. Even though many parents help their children by ponying up a down payment, Mckinley said financially it isn't an option for a lot of people, which is why he said some are investing with their kids. "A lot of support is coming from parents. A lot of parents are using some of the equity they have built up over the years to help their kids out," said Mckinley. "By investing, parents are giving their kids a hand up instead of a hand out." *Article provided by Times-Colomnist* Tip!! Once approved for a mortgage DO NOT apply for any more credit. One of the biggest mistakes new homebuyers make is assuming that once your approved that can't change. Mortgage lenders run a credit check one more time before the release the funds, usually the day before the closing date. This means that if you apply for more credit and lower your score its possible that you won't be moving after all! Always talk to a financial expert before making these decisions. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate.
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Just because you’re full doesn’t mean you can’t browse the menu. And just because I’m not planning to move doesn’t mean I don’t check real estate websites regularly. As life changes — new jobs, growing families, overall changes in need — so do our priorities when it comes to the roof over our head. As a first-time homeowner, I’m an amateur when it comes to buying, and I’ve yet to wear the seller’s shoes. It all makes me wonder, how easy (or difficult) would it be to offload one home in favour of another?
“It's technically a buyers market,” says Jason Shadbolt, Realtor for ViewPoint Realty, “mainly because there are far more listings than there are buyers. But I use the word ‘technically’ because buyers feel that houses are priced too high and, as a result, are not buying. Until sellers make a price adjustment, inventory will continue to increase and sales will remain low, not making it a preferred market for either buyers or sellers.” While the biggest driving factor behind sales is price, there are other aspects that can draw or deter a sale. “Aside from that, people are looking for specific upgrades such as window and shingle replacement — if the roof is in need of shingles or the windows are older, it can seriously hinder the sale of a home,” Shadbolt says. “Competitive pricing and doing necessary repairs or upgrades to a home — these two factors will be what sets your home apart from others on the market.” Knowledge is power, according to Shadbolt, who says your ability to be flexible can make or break your ability to make the best deal whether you’re buying or selling. “It makes my job easier when a seller listens to their agent and looks at the relevant information they are given. Sellers need to realize that prices from home sales last year are not reflective of today’s home-selling prices.” But it’s not only the seller’s job to make the sale easier. Buyers can do their own homework to make process simpler. “It makes my job easier when a buyer gets pre-approved for a mortgage and spends some time deciding on the location they want to live in before they start their physical search,” Shadbolt says. “The biggest challenge for buyers is that there is so much inventory. Such a saturated market breeds procrastination and can cause them to take up to six months to make a purchase that in a better market would have one. The biggest challenge for sellers is the number of listings they are competing with, as well as the likelihood of them to receiving offers $20,000 to $40,000 below asking price. Sellers also struggle with the realization that they will not sell their home for as much as they would have if they sold their home last year.” In an ever-fluctuating market, it can’t hurt to be prepared when the right prospect comes along. Staying on top of home repairs and maintenance can make it easier to sell your current home if your dream home comes within reach. “The best thing for buyers and sellers to do is to spend more time educating themselves about today’s market by using tools such as viewpoint.ca and finding a realtor who is well rounded in all aspects of purchase and sales,” Shadbolt suggests. “You can never ask too many questions and finding a realtor who can answer all of them will be the difference between a positive and negative experience.” **A special thanks to Lindsey Bunin at the Chronicle Herald for the opportunity to be a part of her column. It’s no secret — the housing market is off to a slower start this year compared to last year. Recent data released by the Nova Scotia Association of REALTORS® (NSAR) shows a less active market for the first three-months of the year throughout the province in comparison to the same period in 2012.
The result is that homes in Nova Scotia have remained around the same levels, with a slight decrease in price by, on average, two per cent. It also means that, in most regions in Nova Scotia, homes stay on the market for longer periods before deals are finalized. There are really a number of reasons why, and some of these reasons vary depending on where you live. Your local REALTOR® can help you understand what factors are at play in your area, whether you live in Cape Breton, the central part of the province, or in our Southern-most tip. The current market creates opportunities for sellers looking to enter a market this spring. Identifying the right price makes a big difference in terms of making a successful sale. Here are a few reasons why: The price tag is part of the first impression. The price can lead potential buyers to make assumptions if the home seems to be overpriced for the market; likewise, they will make assumptions if it is underpriced. The first month is critical. The first 30 days on the market is a critical time frame when you list. As a new entry on the market, it is likely to draw the most interest from potential buyers, and price is part of the appeal. Price can limit your interest. Buyers are shopping with a price in mind, and may have pre-qualified for a set budget ideal to their preferred neighbourhood. You don’t want to price yourself out of that budget by coming in too high above comparable properties. The right price avoids price slashing. Setting the right price from day one saves you from slashing the price down the road. Price reductions can set the wrong tone for offer negotiations later on. Pricing keeps it real. Your next move is likely being made in consideration of what your home will sell for. You can spare yourself from having to adjust your own dream if you keep the asking price in the right range. Nova Scotia’s average sales price for January to March 2013 closed at $217,083. This means Nova Scotia remains one of the most affordable places to live! Working with a REALTOR® will help you value your home appropriately as part of a successful home-selling strategy. *compliments of the chronicle herald* TIP OF THE WEEK When listing your home and trying to determine market value it is imperative to remember that true market value of your home is; what any given buyer of reasonable understanding and making an educated decision is willing to pay for your home at this time. By over pricing your home you reduce your exposure drastically. If after a couple weeks your home hasn't had much interest speak to your Realtor, he or she will advise you of the condition of the market in your area. If the market is healthy it comes down to two items, your home is priced too high, or it hasn't been marketed well enough. Talk to the professionals and remember if you have any questions CALL ME!! Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. Shalini Devid was excited about the prospect of buying her first condo. Then mortgage lending rules were tightened, choking her hopes of home ownership. At least for now.
Devid, a financial analyst who works in downtown Toronto and rents in Etobicoke, has been caught by the federal government’s move to reduce the maximum amortization period from 30 years to 25 years on CMHC-insured mortgages. (Buyers with a down-payment of less than 20 per cent of the purchase price are required to buy mortgage insurance through Canada Mortgage and Housing Corporation.) The shorter amortization means higher monthly payments, equivalent to paying almost 1 per cent more on your mortgage rate. “I was ready to jump right in and buy,” says Devid, who was looking for a condo in the $350,000 to $400,000 price range. “But the change in the amortization period made a huge difference.” For example, a $300,000-mortgage at 4 per cent and amortized over 30 years would cost $1,426 a month to pay back. The same mortgage amortized over 25 years would cost $1,578 per month, an increase of $152. After she did detailed calculations using different scenarios, Devid worried that, once she pays the mortgage, condo fees and utilities, she’ll be stretched too thin. “Looking at monthly payments, (amortization) is one of the biggest things for me,” says the first-time buyer, who now thinks she’ll save for a few more years until she has a 20 per cent down payment. “It’s unfortunate, because I’d rather be an owner than a renter,” she says. Devid is not alone in her disappointment. Others who are caught in the amortization crunch are either putting off their purchase or buying less house, says Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals. Since the lending rules changed last July, house sales have dropped more than 8 per cent, despite mortgage interest rates being at an almost record low, according to Murphy. He points out that 17 per cent of buyers who qualified for a mortgage in 2010 would not qualify today under the new rules, Finance Minister Jim Flaherty’s fourth round of changes since 2008. In the past, Murphy says a “large percentage” of buyers opted for an amortization of 30 years or longer, for the flexibility in financial planning it offered. His organization is concerned about the impact of the changes on a real estate market that’s already slowing. Brampton realtor Jaspal Cheema, who’s been helping Devid in her search, says first-time buyers are being squeezed out of the market, because they typically have a smaller down-payment. “It’s hard to balance between emotions and pocketbook,” he says, noting the urge to buy is especially strong among immigrants. Toronto mortgage broker Joe Walsh believes “there are still lots and lots of people who want to buy.” Among the clients he sees for pre-approval are those who offset the impact of a reduced amortization by settling for property of a lesser value. One couple, for example, opted for a townhouse instead of a semi-detached home. Others may choose a less-expensive condo as a stepping stone to a single-family home. "The aim of the new rules is to help homeowners curb their debt load" The government is telling buyers: “We don’t want anyone pushing and pushing and getting into trouble,” he says. At the same time, lenders have been put on notice that “you’ve been a bit loose with the purse strings and you need to tighten them up.” Along with the reduction in amortization periods, Walsh says the government also toughened underwriting guidelines, which translates into more paperwork for both buyers and lenders. In the past, mortgage-seekers might have had to produce a letter from an employer stating their salary and a pay stub, but now it could be a letter, two pay stubs, a tax return and a notice of assessment. But there is a silver lining to the amortization cloud: With five fewer years to pay off a mortgage, home owners will see substantial savings in interest charges. That $300,000 loan, for example, will cost almost $47,000 less than if it was repaid over 30 years *Compliments of thestar.ca* TIP OF THE WEEK!! Budget your money! When you go to get pre-approved for a mortgage banks will take anywhere between 40-44% of your BEFORE tax income, and does not take into account utility bills, insurance bills, and misc. monthly expenses. This means that you may be able to afford a $300,000 home on paper, however, if you don't do a break down of what you actually take home every month vs. what you spend you may end up in a tight position. As you can see from the above article the new rules can effective you today but can save you thousands in the true cost of home ownership. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. You've worked hard to save for a down payment, and determined how much you can afford to pay. Now comes the fun part of buying a home - choosing one that's right for you and your family.
You've probably heard the old real estate saying, "location, location, location." That statement still holds true because location is one of the most critical factors in buying a home. Even a home that meets all of your needs and wants is probably not the right home for you if it's in the wrong location. It's important to spend some time thinking about where you want to live before you start searching for a home. For example, ask yourself if you want to live in a city, a town or in the countryside. Be sure to factor in things like commute time and cost from your preferred location to work and about other amenities such as schools or parks. Next on your list of decisions to make when buying a home is the type of house you want. Keep in mind that the home you buy should meet most of your needs as much as possible for the next five to 10 years, or be a home that can grow and change with your needs. For example, do you plan to have children, are you close to retirement or will you have an older relative who might come to live with you? TYPES OF HOMES With so many types of homes available, including single-family detached, single-family semi-detached, row house (townhouse) or condominium apartment, there's something for every type of homebuyer. The type of home you choose to buy will depend on your resources, needs and wants. It's a good idea to develop a checklist to assist with your decision. CMHC's Home Features Checklist available at cmhc.ca can help you think about what you need today, and what you may need in the future. Your "needs" list will include things like number of bedrooms, size of home, parking facilities or features to accommodate family members with special needs. Your "wants" list refers to special features you'd like to have such as air conditioning or a swimming pool. FORMS OF OWNERSHIP Buying a home means you own it as opposed to renting, but there are two forms of home ownership - freehold or condominium. Freehold means that one person (or two, such as joint ownership by spouses) owns the land and house outright. Freehold owners can do what they want with their property - up to a point. They must follow municipal bylaws, subdivision agreements, building codes and federal and provincial laws, such as those protecting the environment. Detached and semi-detached homes, duplexes and townhouses are usually owned freehold. Condominium ownership means you own the unit you live in and share ownership rights for the common space of the building. Condominium owners together control the common areas through an owners' association. Ensuring you choose the home that's right for you and your family will require planning and a little bit of homework. CMHC's Homebuying Step by Step: A Consumer Guide and Workbook will lead you through the homebuying process in five simple steps and includes several helpful worksheets and checklists. Get your free copy at cmhc.ca or call 1-800668-2642. For more helpful advice on home ownership, sign up for our free electronic newsletter at www.cmhc. ca/enewsletters. See wants and needs checklist on page H18. TIP OF THE WEEK!! Get prepared for your home search by making lists. Start with two columns NEEDS and WANTS, then spend some time writing down everything you can think of. Next, review this list with your realtor. This will educate you on what WANTS you may lose in order to meet your NEEDS. As you begin your home search your budget and location will also determine which of the items on your list will have to sacrifice. Adjust your list as often as possible, its amazing how many NEEDs and WANTs change throughout the process. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. Perhaps you are feeling insecure about your knowledge of the financial implications of homeownership.
Homes are a major asset and for most Canadians it represents the single largest financial investment of their lives. Most buyers must finance their purchase using some form of credit. While homeownership can be a significant source of equity over the long term, Canadians need to remain vigilant about their finances at this critical decision point in their lives. In a recent survey commissioned by the Canadian Real Estate Association (CREA), 70 per cent of young Canadians between 18 and 29 indicated a “major need” for more information about the financial implications of buying a home. This figure is particularly meaningful as many in this age group are on the cusp of buying a home for the first time and need to make informed financial decisions about their future. Buying a home is always a big decision. Whether it is your first time, or your third or fourth home, it is a big investment that warrants careful financial planning and consideration. And many homeowners with locked-in rates may not feel the impact of market fluctuations until their mortgage comes due for renewal. Realtors are usually a homebuyers’ first line of contact, and as such, we need to use our knowledge and expertise of the home-buying process to empower Canadians to make informed financial decisions. Realtors and their national association, CREA, have collaborated with the Financial Consumer Agency of Canada (FCAC), to develop and provide a resource for Canadians to help them more easily understand and navigate the home-buying process. The Homebuyers’ Road Map (available free of charge at crea.ca/resources) outlines the financial aspects of the home-buying process, as well as the importance of negotiating with lenders and utilizing government programs. The real estate industry’s goal is to empower Canadians with knowledge, skills and confidence to make responsible financial decisions about homeownership, one of the most significant financial and lifestyle decisions most will ever make. *Article compliments of Ann Hannah is president of the Toronto Real Estate Board TIP OF THE WEEK!! Get Pre-Approved! As the market heats up getting pre-approved is your best defence against losing your dream home. Knowing your financial situation is key to ensuring you are prepared to make an offer and determines what price range you should be looking in. Although seemingly daunting, the task of becoming pre-approved is a straight forward task that takes little time and generally you leave knowing where you stand. Do know who to contact? ME!! I know several mortgage professionals who can help you through these important first steps in purchasing you new home. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. Firstly, you may have noticed a change in the flag I am flying. I am now a proud member of the Viewpoint Realty! This move will help me have the best tools available to work for my clients. I am sure many of you have been on our website and are likely addicted by now, but for those who haven't take a minute to visit www.viewpoint.ca
Now for the big news, mortgage rate drops! After the release of the new rates talks always spark about the outcomes of such a change. After searching for a good article this is as far as I am concerned the best insight on what is happening in the market. “Politicians of every stripe are putting up a rare united front in criticizing the bank for cutting its five-year, fixed-rate mortgage by 10 basis points. That’s 10 one-hundredths of a percentage point. The suggestion is that BMO is somehow putting Canada’s housing market at risk of U.S.-style ruin, and enticing borrowers to build up debt at a time when policy makers are urging them to do just the opposite. As The Globe and Mail’s Tara Perkins reports, BMO on the weekend cut the key rate to 2.99 per cent, from 3.09 per cent, sparking fears of a mortgage rate war and prompting warnings from Finance Minister Jim Flaherty and members of the other political parties. What BMO is doing is offering homebuyers significant longer-term savings of almost $2,400 in interest over the five years, but on a daily basis savings that are well below the price of a cup of coffee. Hardly an inducement. It’s true that Canadians are juggling a record household debt burden, but, since Mr. Flaherty’s mortgage restrictions of last summer, the housing market has cooled rapidly. And credit growth has slowed markedly. The residential real estate market is expected to continue cooling regardless of 10 basis points. What BMO may do is attract a small number of borrowers – to BMO – who were looking to buy anyway. What it’s not going to do is cause a bubble that wouldn’t otherwise have been there. Consider the last time BMO did this, a year ago, with the same cut-rate offer. As The Globe and Mail’s Grant Robertson writes, that price war won BMO a gain in market share of just 0.31 per cent, and overall mortgage volumes didn’t change all that much. True, you can look at this with the suggestion that BMO is going against the spirit of what Mr. Flaherty is trying to do, which is engineer a soft-landing in the real estate market. Or you can look at it as a break for people who were probably going to buy regardless. Homebuyers will look at what they can handle on a monthly basis. On that front, the difference on a $500,000, five-year, fixed-rate mortgage with 25-year amortization is $25.72 . Or 86 cents a day. Despite how odd it may sound, put it in its simplest terms. That’s far less than the $2.15 you’d pay at my neighbourhood Starbucks for a grande blonde, medium or dark roast cup of coffee. Or the $1.71 at Tim Hortons for a similar-size coffee without a fancy name. We attack our banks when we believe their rates are usurious. Then we attack them when we think they’re too low. So let’s put this in perspective: If you drink two coffees a day, you’d save the same amount (2 cents more, actually) by simply switching from Starbucks to Tim Hortons.” *Article compliments of The Globe and Mail* TIP OF THE WEEK When you are ready to buy a home don't be fooled by rate specials! Ask questions, sometimes great rates are too good to be true. That great rate that is plastered everywhere sometimes come with a even higher price than expected. This may not always be the case but you owe it to yourself to ask questions. Find out about the mortgage product your are signing up for. How much is the penalty to break the mortgage early? How much additional money can you put on the principle mortgage amount without a penalty? Is this mortgage portable? Make your decision to sign after you research the product that impacts the biggest purchase most make in their lifetime, I promise you won't be sorry! Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. This is the time of year most Canadians come out of their winter shell and
begin their quest for their new home. They’ve been dreaming of buying their new home all winter, they’ve checked out all the free real estate magazines and have even test-driven a couple of mortgage calculators to see what fits in their budgets. But alas, with this frenzy of activity in the market one has to slow down and make sure you don’t get trapped in a situation you don’t feel comfortable with; after all this is likely your largest purchase in your life thus far, and you don’t want to leave it to chance! #1: Confused buyers - don’t start looking before you figure out what you are looking for! There may be a big difference between the kind of home you want and the kind of home you need. Realize that it’s important to satisfy the needs first and the wants last. #2: Shortsighted buyers - don’t forget to factor in your future needs. What will you need in five to 10 years? Try to estimate your future needs as well as your immediate needs. #3: Unrealistic buyers - how much can you afford, before looking. Determine what you can realistically afford to pay for a home, remembering that there is a myriad of costs that you probably haven’t even considered (i.e. closing costs). #4: Unapproved buyers - get pre-approved for a mortgage. Many sellers want to know that you can really afford the home before they will take your offer seriously. You can go through the application process for a mortgage and have financing in place before you even start looking. #5: Cash poor buyers - you may not be as poor as you think! Consider every possible source of cash - RRSPs, life insurance policies, gifts from family members, work bonuses. #6: Bank bound buyers - don’t take “NO” as your final answer! Shop around for the best mortgage. Many of us think ‘bank’ when we think mortgage, but there are dozens of other options available through a mortgage agent and they all have various rates, terms and repayment options, usually better than your banks up-front offerings. #7: Uninformed buyers. There’s a lot of information on the local & national housing situation; check online, attend seminars offered by real estate professionals. Check out books, magazines and web sites. #8: Do it yourself buyers. Get a realtor, but get a good one. They are paid from the seller, and will work on your behalf. #9: Sloppy buyers. Get a home inspection. The inspector’s job is to check the property and tell you what defects if any need to be repaired or replaced. This will provide you with peace of mind. #10: Buyers who don’t do their homework - check the zoning for the surrounding area, and research possible restrictions. You don’t want to see a shopping mall going up behind you. #11: The emotional buyer - emotional buying can lead to disasters and losing control of your deal. You can end up paying too much, buy a poorly built home or end up with an airport in your back yard, if you end up letting your emotions control your buying decision. #12: Location. Location. Location! -- did I mention location? Location is the key. The value of your home is affected by those around you. The home may be perfect, but look carefully at the neighbourhood too. No home is an island (usually) and the value is affected by the homes that surround it. #13: Screwing up the offer - it’s not over once you’ve found the house you want. Now you have to make an offer. Some common mistakes at this stage include; low-balling, paying too much, being afraid to negotiate, being pressured into a quick deal and not asking the seller to pay for extras. *Article provided by the Red Deer Press* TIP OF THE WEEK See the above article, all 13 are great tips to ensure you are prepared to make your purchase. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. ![]() Buying a home -- especially if it's your first home -- can be very exciting. However, home ownership also comes with greater financial responsibility. It's important to know exactly how much you can afford to pay for a house in order to avoid any unpleasant surprises. The first thing you need to determine is your net worth. To calculate your net worth you will need to look at your current monthly expenses and your monthly debt payments as well as your assets including property, vehicles you own, savings, RRSPs and other assets. This information will provide a snapshot of your current financial situation and indicate the maximum house price you should consider. Start by examining your present budget to see how much you are spending each month on household expenses. Canada Mortgage and Housing Corporation (CMHC) has several handy financial tools available online at www.cmhc.ca, such as the Current Household Budget worksheet to help you with your calculations. Next, you need to know how much debt you are carrying. This will not only help you determine if you are financially ready for home ownership, but when you decide to buy a home, mortgage lenders will ask for this information. You can use CMHC's Monthly Debt Payments Table to determine your current monthly debt payments. With a clear picture of your financial situation, you should be able to establish what you can afford in monthly housing costs. The maximum home price you can afford will depend on a number of factors, but the most important are your gross household income, your down payment and the mortgage interest rate. Financial institutions follow two simple affordability rules to determine how much you can pay. The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your average gross monthly income. The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts such as car loans and credit card payments. After making all the necessary calculations, you should have a good idea of how financially ready you are and if you can confidently proceed with the home ownership process. If, however, your calculations show that you might have trouble meeting monthly debt payments, you may need to step back and make some adjustments in order to improve your financial situation and get approved for a mortgage. For example, try paying off some loans first or saving for a larger down payment. Also, take a closer look at your current household budget to see where you can spend less and consider lowering your price range. Some other helpful strategies may include meeting with a credit counsellor to help you figure out how to minimize your debts, buying your home through a rent-to-own program which are sometimes provided by the builder or a non-profit sponsor, or asking the housing department of your municipality if any there are special programs to help homebuyers. There are many steps involved in buying a home -- including being financially prepared. CMHC's Homebuying Step by Step: A Consumer Guide and Workbook will lead you through the homebuying process in five simple steps, and includes several helpful worksheets and checklists. Get your free copy at www.cmhc.caor Click Here for Calculators to help determine approximate costs for your mortgage!! TIP OF THE WEEK!! When begining to search for a mortgage, make sure that you do so within a 2 week period so it has as little impact on your credit score as possible. Each time you give out your Social Insurance Number (SIN) for a credit check your are docked points from your score. If you can do your mortgage hunting within a two week period you will only be docked for the first credit check. Keep track of your credit score, try to limit yourself to 1-3 credit checks a year and when you do get your credit check have the representive review it with you. Mistakes happen quite often and the report will show which bills have been paid on time and the number of times your credit has been checked. If you find mistakes they can be fixed! Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. About 12 per cent fewer Canadian houses were sold in November compared to the
same month a year ago, and prices were off by just under one per cent, according to figures released today. The Canadian Real Estate Association said sales were lower in three-quarters of all local housing markets, including most large Canadian cities. Calgary was the exception to that trend, with a 10.6 per cent annual increase in sales activity. "National sales activity lacks the momentum it had a year ago," CREA chief economist Gregory Klump said. Click below to see the slow decline from 1990 through 2011 Sales have now fallen in three of the past four months. In July, Ottawa moved to tighten the rules that govern the mortgage industry, and that has served to cool the housing market, CREA says. "Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity," Klump said. The average price of a Canadian home sold last month was $356,687, a 0.8 per cent decline over a year ago. The average price metric continues to be impacted by what CREA calls, "compositional factors," namely less sales in the formerly red hot real estate markets of Toronto and Vancouver. TIP OF THE WEEK!! When looking for that perfect area to live in take the time to drive around the neighbourhood. See day turn to night with a simple drive and learn what goes on in the neighbourhood during the evening. There is a chance you may see a very different street from the one you viewed while the sun was high in the in the sky. Are you looking for a Realtor in Halifax? Thinking it may be the time to sell but arn't quite sure? Thinking about when you should make the move and set out to make a purchase? I can quickly provide complimentry pressure free appraisals or answer any questions you have regarding mortgages, renos and real estate. Contact me or feel free to leave a public comment or question below. Follow me on Twitter and Facebook to see more updates and see what is going on in Nova Scotia real estate. |
Jason Shadbolt, BMgtAs a Realtor, Builder and previous Mortgage Specialist, if you have questions, all you have to do is ask! |