Planning to buy

[sexualbanana]

I've decided I need to start planning to buy a house. Only problem is, I don't know where to start. At this point in my career, I don't think I make nearly enough to be able to afford a house now, but in a year or so, I'd like to be in a positive position to actively look for one that I like.

What I'm looking for is tips and strategies so I could be on my way to a house. I figure I can save about $1000 a month, and right now I have about $7000 saved.

[98type_r]

Make a budget, and stick to it. Cut out/cut back on all unnecessary expenses like eating out, going drinking.

[FreakinPrince]

There is alot of ways to start planning...

my goal is hopefully to get a house this summer/fall if possible

I already got a place in BC and hopefully that will be on sale soon....

that's where i get the money in order to put a downpayment for the next house


The way i started was to look at the sites of all listing and see what you are in the market for...this will give you an idea of how much the house that you wish to have will cost...of course added another 10 g for down the road as prices might rise then.


I am in the process of getting a letter from my company to state the salary range i am in, so i can forward it to my bank and allow them to tell me if i qualify for a mortage, this will give me an idea if i can go ahead alone....if not, i already got someone who is interested in investing with me on the house...of course they will just be paying the monthly mortage dues and i will be taking care of the property as well as paying the rest...so that person just basically sit back and do nothing....its a good opportunity for that person....


if you are starting from scratch..then i would do what 98type_r says but then again you have to look at the fact of how much downpayment you must put in order to get the house....and do some research with banks or broker to see what's the best type of mortage and if you can do it alone if you are not interested in having someone to have a joint mortage with you....


i hope all the above make sense....:S

[freshprince1]

we were in your situation last year. Start an RRSP with high growth and put all your house fund savings in it, that way it grows while you're saving. You're allowed to take it out for a first house. You'll have two years off, then have to pay it back within 15 years.

[freshprince1]

What really helped us was moving into my in-laws for a year. They have a big house and it was only us 4. They charged zero rent because as long as we were saving almost everything for a house. We were able to save almost everything we earned. It was a great way to get the savings up, worth any awkwardness living with the in-laws.

[theken]

he lives @ home rent is no issue, just get a 40 year mortgage like everyone else is doing, you'll have the same mortgage payment that I , but it will be 25 years after mine is payed off that yours will be

[Amysicle]

Originally posted by freshprince1
we were in your situation last year. Start an RRSP with high growth and put all your house fund savings in it, that way it grows while you're saving. You're allowed to take it out for a first house. You'll have two years off, then have to pay it back within 15 years.
http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html

To OP, where are you currently keeping your money so far? Hopefully in a high interest savings account at the very least. I also think if you put quite a bit of money into your RRSP, it could possibly give you a decent chunk of change back in a tax refund which you could put towards your house? Anyone care to correct me on that?

[HRD2PLZ]

What a lot of young people seem to be doing is going for the low down payment (0 - 5%) and stretching the amortization over the longest period possible. That doesn't necessarily mean that you won't be mortgage free for 40 years though. Most lenders have pre-payment privileges, when taken advantage of you will find the principle mortgage amount is quickly reduced. Any extra money you can put on your mortgage goes right to the principle. That's one thing I like to point out to people who don't think they want a 40 year mortgage. It really just opens up your options so that you can get your foot into the market.

I had a client who wanted to buy a condo in 2005 but she didn't have her 25% saved up. So, she decided to wait until she had her full 25% down. I sold her a condo in September of 2006, so in the time it took her to save that extra $15,000 the market went up over $100,000 for a comparable condo. Not saying that this is or will always be the case, but sometimes its best to jump in as soon as you can.

[ercchry]

i was thinking about this too and when i talked to my uncle he said save until next year since well he thinks there will be a bit of a crash in the market due to a few different things. but yeah he invests for a living and is doing a pretty damn good job of it, so he must know something

but for my down payment to be able to get a bit nicer of a place i want it to be 20% and if i dont have this saved up yet then my dad was willing to work out a loan on the side at the same rate that i would be paying for the morgage that i would have

also i was looking at buying a place with a friend and then have a room to rent and have the plan be to sell it after 5 years or so and then both of us would hopefully have a large enough chunk of change to get a place of our own

[Maddog55]

Originally posted by Amysicle

http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html

To OP, where are you currently keeping your money so far? Hopefully in a high interest savings account at the very least. I also think if you put quite a bit of money into your RRSP, it could possibly give you a decent chunk of change back in a tax refund which you could put towards your house? Anyone care to correct me on that?

Correct. If he's making more than 40,000, roughly, he'll be in the 40% bracket...so for every $1,000 in RRSP deposits, he'll get back $400 from his tax return.

[sexualbanana]

Originally posted by Amysicle

http://www.cra-arc.gc.ca/tax/individuals/topics/rrsp/hbp/menu-e.html

To OP, where are you currently keeping your money so far? Hopefully in a high interest savings account at the very least. I also think if you put quite a bit of money into your RRSP, it could possibly give you a decent chunk of change back in a tax refund which you could put towards your house? Anyone care to correct me on that?

I currently have the money in a ING account, getting 3.75% in interest.

I also want to get everyone else's input on this:
Right now, I'm making mid $30k a year. In my position, it takes a few years to start making more as I'm just trying to get experience right now. But really, if I want to make more money, I will have to go to a different company. I've been at my current employer for just over a year now, and I think I will probably change companies at the end of my 2nd year.
Most banks typically want you to be employed at the same place for at least a year, correct? And if that's the case, how does that effect my ability to get a mortgage, etc?

[Maddog55]

Originally posted by sexualbanana


I currently have the money in a ING account, getting 3.75% in interest.

I also want to get everyone else's input on this:
Right now, I'm making mid $30k a year. In my position, it takes a few years to start making more as I'm just trying to get experience right now. But really, if I want to make more money, I will have to go to a different company. I've been at my current employer for just over a year now, and I think I will probably change companies at the end of my 2nd year.
Most banks typically want you to be employed at the same place for at least a year, correct? And if that's the case, how does that effect my ability to get a mortgage, etc?

The first thing you want to do..before you do anything is get a hold of a broker and get pre-approved. Even if you're a year away from an actual purpose this will do two things:
1) Let you know how much of a mortgage you will qualify for..
2) more importantly, if NOT..you will know what EXACTLY you will need to do in order to GET a mortgage, and that will give you lots of time to work on it.

some realtors won't even take a client out to look at houses unless they're pre-approved. So get that step out of the way...then you will have a clearer picture of what to save for.

Don't forget about looking for "assumable" mortgages too.

Talk to this guy: Broker (http://www.canequity.ca/) He's local. If you're serious, PM me and I'll give you more info. I can also give you the name of a good realtor.

[freshprince1]

Originally posted by sexualbanana


I currently have the money in a ING account, getting 3.75% in interest.

I also want to get everyone else's input on this:
Right now, I'm making mid $30k a year. In my position, it takes a few years to start making more as I'm just trying to get experience right now. But really, if I want to make more money, I will have to go to a different company. I've been at my current employer for just over a year now, and I think I will probably change companies at the end of my 2nd year.
Most banks typically want you to be employed at the same place for at least a year, correct? And if that's the case, how does that effect my ability to get a mortgage, etc?

Most just need a letter from your employer saying that you're in good standing, verifying your pay and saying you're not on probation (i.e. usually a three month probabtionary period) Some companies, like my new company, will waive that period to help out with the process.

[Chris88CL]

Im in the process at the moment and required employment letters from any employers you have had within the last 3 years, including the current employer.

[blownz]

Originally posted by Maddog55


Correct. If he's making more than 40,000, roughly, he'll be in the 40% bracket...so for every $1,000 in RRSP deposits, he'll get back $400 from his tax return.

Not even close. He will be be at 32% and in Alberta the highest rate is 39% which you hit at about 120k a year.

[Maddog55]

Originally posted by blownz


Not even close. He will be be at 32% and in Alberta the highest rate is 39% which you hit at about 120k a year.

So for every $1,000 he puts into an RRSP he'll get back $320...

happy?? :rolleyes:

The point was: that putting his savings into an RRSP he could benefit from the deductions and put those towards his savings as well.


I also think if you put quite a bit of money into your RRSP, it could possibly give you a decent chunk of change back in a tax refund which you could put towards your house?

[Bimmer88]

Hey guys I'm gonna jump on this boat with this issue.

If you invest into a RRSP but the max your allowed to take out for first time home buy is 20k? is that correct? So then you'd going to need a couple more 20k's to make that 25% to be in the safe zone?... sigh... That's crazy.

Well do what the couple did in Ontario and saved 80% of their income and paid off their house in like... 4 years was it? and now their livin the dream!

[max_boost]

Well Banana boy, since you are a pimp you can always supplement your income by renting out rooms/basement in your house. Or if you let us use it for Poker, we can pay you a fee. Or if you are really desperate, you can always do some deliveries for yours truly on the weekend :D

OK seriously, ask yourself this, do you think a house will be cheaper now or 1 year from now? Get into the market ASAP rather than saving over the course of the next year. There are so many options with paying down your mortgage, prepayment at the beginning of each year, double your monthly payments etc. That extra $10-15k you plan to save will get put towards it anyway, why wait?

Start talking to brokers and see how much you are qualified for. Use that number and start house hunting. If necessary, perhaps your parents can co-sign to ensure you get the lowest possible rates. Hell if they want to help out, ask to borrow the 25% too.

[Maddog55]

Originally posted by max_boost

OK seriously, ask yourself this, do you think a house will be cheaper now or 1 year from now? Get into the market ASAP rather than saving over the course of the next year. There are so many options with paying down your mortgage, prepayment at the beginning of each year, double your monthly payments etc. That extra $10-15k you plan to save will get put towards it anyway, why wait?

Start talking to brokers and see how much you are qualified for. Use that number and start house hunting. If necessary, perhaps your parents can co-sign to ensure you get the lowest possible rates. Hell if they want to help out, ask to borrow the 25% too.

Bingo! great post.

[FishPoo]

You can guess about house prices all you want, but don't rush into making a decision. Buying into a hot and cooling market is not the greatest idea especially when it could be peaking.

That's the reason the american bubble burst, people bought assuming the price would keep going up.

If you have to buy, make sure its affordable and makes sense in the long-run because you never know if you can always sell it at that price. (e.g. some of the people who bought near the peak in the summer of 2007 will have lost 10-15% already)

I'm not saying prices will go down, but eventually they will come back up, it just depends on when.

[blownz]

Originally posted by Maddog55

happy?? :rolleyes:


lol

Sorry, but you just stated very matter-of-factly that he was in the 40% tax bracket which was incorrect.

That post like many of yours had good information in it so many people will take it as fact and I just wanted to make sure there wasn't a bunch of people around here thinking that at 40k a year you are in a 40% tax bracket. No need to take offence. :thumbsup:

[lint]

Originally posted by freshprince1
we were in your situation last year. Start an RRSP with high growth and put all your house fund savings in it, that way it grows while you're saving. You're allowed to take it out for a first house. You'll have two years off, then have to pay it back within 15 years.

Do you mean high growth, as in high return accompanied by high risk? Saving up for a down payment usually means short term, and with that timeline you'd tend to pick principal preservation as opposed to growth. The OP has it in a high interest savings account, which really is a fine place to have his money if he needs it in a years time.