Thinking on Buying Your First Home?

Getting Your Foot in the Door.

Like many would-be first time homeowners, you may be wondering how you can possibly afford to buy your first home. Even if you think you can’t afford a home, these saving tips and financing strategies can take you there sooner than you think and turn you from a renter into an owner.

Develop a plan for saving

The first priority for you should be to develop a culture of saving. This not only helps you in budgeting and planning for the future, but also to satisfy banks and other lending institutions that you have a clear commitment to save.

Start an automatic saving plan

Saving for a down payment can be a financial challenge but it’s a step forward to owning your dream home. Make saving automatic by setting up an automatic savings plan at your bank to regularly move a specific amount of money directly from your chequing account to a savings account. You’ll be surprised at how much you can save and how quickly the “pay yourself first” approach adds up.

Borrow from yourself

The federal government’s Home Buyer’s Plan (HBP) lets you borrow from your Registered Retirement Savings Plan (RRSP) to help purchase your first home. You and your partner can each withdraw up to $20,000, provided it’s not locked-in and the money has been in the RRSP for at least 90 days. You have to repay the loan in installments over the next 15 years to avoid a tax hit.

Take a holiday from tax

If you open a new Tax-Free Savings Account (TFSA), you won’t pay any tax on earnings, which will help you compound your savings. You can contribute up to $5,000 a year to a TFSA, and save for anything you like, tax-free.

Review your mortgage options

Once you make the decision to purchase a property, the next choice is the type of loan to suit your budget. The two most common types of loans are the variable interest rate loan and the fixed interest rate loan.

You can now choose to pay back your mortgage over 25 years, instead of the traditional 20-year amortization period. This means you will pay more interest over the long term, but you can reduce monthly payments to get into your starter home. You can always change this later, once your income rises and you can pay your mortgage down faster.

Get into a starter house

Try to be as flexible as possible when choosing your first home. Unless you are status conscious, your first home doesn’t necessarily have to be your dream home. You could settle for a starter home, which you can afford with a small down payment and easy mortgage installments. There are plenty of lower-priced houses out there in need of repair, with some “Do-It-Yourself” projects where you can add more value to the house. Just be careful not to buy a place where the cost of repairs will eat up any profits you might make when you sell.

In just a few years you will build enough equity in your starter home to make it easier for you to sell and move into to your dream home.

Buying your first home is an exciting process. After all, your home could be the largest asset you’ll ever own. Being able to finance most of its cost will take a load off your back in the future.

Have a question?  Please don’t hesitate to contact me.  I would be happy to answer it or assist you in finding an answer.  Buying your first home is an exciting process.   Happy House Hunting !

The House Hunt is On ! Now What?

 The House Hunt: How Many Homes Should I See?

So, you are beginning the hunt for a new home, and you ask yourself the question that most buyers ask, “How many homes should I see?”

There are different theories on this. They range from the golden rule claim that you MUST see many properties to a mild suggestion of staying within a 5-20 house range. The truth is, there is no set-in-stone answer to this question. The good news is, there is much you can do to narrow down your search and help you find the home looking for, hopefully sooner rather than later.
Here is an estimated break-down on what happens for most buyers:
43% will look at 2-10 homes before purchasing, 27% will check-out more than 20 properties, 22% will see 11-20 homes, while 8% may fall in love and purchase the first home they see.
But, these are statistics, and at the end of the day who knows where you will fit into these. The key is to find a Realtor whom you trust and who knows the market you are bidding in. Next you should clearly share with them what you are looking for.
And, no, there is nothing wrong with purchasing one of the first homes you see- so long as you know it is what you want.

Some questions to clarify with yourself and your Realtor before starting your house hunt:

 

  • What are your central objectives for purchasing? Is this going to be your dream home, or somewhere you envision staying for only a few years? Is this a family home or an investment property?
  • What are the most important elements you are looking for in your new home? Is it the neighborhood or perhaps the size of the house? Is it important that there are good schools near-by? Prioritize these and other features in order of importance.

  •  If you are buying as a couple, do you both have the same vision of what you are looking for? Deciding up front what you want, collectively, can greatly help simplify and clarify your search down the line.
Have you finalized your financing? Do you have pre-approval for your mortgage and do you know what price you are comfortable with within your pre-approved range?
Another question to ask yourself is, “Am I being realistic with my parameters?”
Buyers can spend forever trying to find a “great deal” on a house. They tend to think that the only way they’ll get what they want is at the expense of someone else- in this case the seller.
But, in real estate, a win/win situation is what makes for a great deal. When good negotiations are made, both buyer and seller are pleased with the final deal. 
Remember this, as you define your search parameters.
Finding a home that is 20% below market value may take you forever- if never. But, knowing what you are looking for will lead you towards a quicker and easier search for your home.
If you are thinking of buying a home and need assistance, give me a call. I would be happy to help or visit my website www.Homes4Sale-Durham.com for loads of insight and current listings. I am only a call away !