Buying my first home. Need Advice.

[Meback]

Hey guys,

I am thinking about buying my first home, but I really need some advice. I have no idea of how to strategically budget this. I am thinking of buying a townhouse for approximately 280,000.

I have about $55,000 saved up, and make about $2500 a month. I wanna pay about 1200 a month on the morgage alone, not including utilities, and I would most likely share the accomadation with a roommate.

-How much do you guys think I should put down as a down payment?

-How long should the term of my morgage be, and how long should it be amoritized for (if that makes sense, I still don't understand what amoritization is)?

- Realistically how much would I have to spend on a lawyer and on a realtor?

- How much money should I have on the side as an emergency fund?

- Are they any other hidden cost?

- typically how much are condo fees, and what does this cover?

(Please don't take into account the cost of applicances, furniture, entertainment systems, bedroom sets)

[Jim Rome99]

Read this before you do anything else.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

[Jim Rome99]

You make only $2500 a month? I hope you mean net, not gross. If you're only grossing 2500 a month forget about owning a 280k house.

[Meback]

Originally posted by Jim Rome99
Read this before you do anything else.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

I have ABSOLUTELY nothing in RRSP. I have a contribution room of about 19,000.

[Meback]

Originally posted by Jim Rome99
You make only $2500 a month? I hope you mean net, not gross. If you're only grossing 2500 a month forget about owning a 280k house.

Yes, net income.

[Jim Rome99]

If you have 55k to put down on a house, you should buy 19k worth of RRSPs, wait 90 days, then withdraw the money through the HBP and buy your house with that.

Thank me when you get a huge ass tax return next April.

[t-im]

A lot of those questions can be answered by a mortgage broker.

Condo fee's vary building to building. Usually with townhouses it covers maintenance and insurance, you pay utilities.

As a buyer, a realtor will cost you nothing.

[Mys73ri0]

a lot of your questions can be answered by a mortgage broker or someone at any of the big banks... the answer to ALL your questions can be had WITHOUT doing a credit check/pre approval, so don't get suckered in by that...

also, don't buy your townhouse/condo with someone else unless you're married... everyone thinks its a good idea but it never is...

http://forums.beyond.ca/st/307571/my-house-co-owner-has-refused-to-pay-any-more-of-the-mortgage/

[Meback]

any recomendations on a broker?

[Pacman]

A data point for you:

I pay $385 in condo fees and that includes heat, water and electricity.

[roopi]

Originally posted by Jim Rome99
If you have 55k to put down on a house, you should buy 19k worth of RRSPs, wait 90 days, then withdraw the money through the HBP and buy your house with that.

Thank me when you get a huge ass tax return next April.

If you can wait the 90 days you should definately do this. You will be required to repay to your RRSP over the next 15 years however it is worth it.

Instead of a mortgage consider a HELOC. Put $55000 down when purchasing the house and you have access to the equity if needed. I don't recall how much you have access to but a mortgage broker can you answer these questions as well. The only risk you take with a HELOC is interest rates rising (which they will) but it may work out for you if you're willing to take on the risk. Again I'm not sure if you qualify with the down payment you have though.

[Meback]

What are the advantages of doing the HBP. How much would I get back in taxes (approximately)?

[broken_legs]

Originally posted by roopi


If you can wait the 90 days you should definately do this. You will be required to repay to your RRSP over the next 15 years however it is worth it.

Instead of a mortgage consider a HELOC. Put $55000 down when purchasing the house and you have access to the equity if needed. I don't recall how much you have access to but a mortgage broker can you answer these questions as well. The only risk you take with a HELOC is interest rates rising (which they will) but it may work out for you if you're willing to take on the risk. Again I'm not sure if you qualify with the down payment you have though.

You will only have access to anything over 80% equity unless you pay CMHC for a high ratio financing.

The fees for anything over 80% are pretty serious - ie 5-10-15k etc...

So assuming you have 55k down, the ma house you can buy is going to be 275k (not including legal and relator commisions etc...) So assuming allt hat jazz in about 10k, the max house you can buy is only 265k.

Now if you want to have access to any equity in that house, with only 55k, you're going to have to find a cheaper house ie - if you bought a 200k house, you'd have about 13k equity.

[roopi]

Originally posted by broken_legs


You will only have access to anything over 80% equity unless you pay CMHC for a high ratio financing.

The fees for anything over 80% are pretty serious - ie 5-10-15k etc...

So assuming you have 55k down, the ma house you can buy is going to be 275k (not including legal and relator commisions etc...) So assuming allt hat jazz in about 10k, the max house you can buy is only 265k.

Now if you want to have access to any equity in that house, with only 55k, you're going to have to find a cheaper house ie - if you bought a 200k house, you'd have about 13k equity.

Thanks for clarifying. :thumbsup:

[Xtrema]

Originally posted by Meback
What are the advantages of doing the HBP. How much would I get back in taxes (approximately)?

If you are netting $2500/month, I guess you make around $44K a year. Putting $20K in an RRSP will net you around $6000 in tax refund.

IMO, unless you have other income, you will have tough time affording $280K home.

$1200 + $300 = $1500 just for the house and leave you with $1000 for food and car. A roommate is definitely recommended.

[kaput]

.

[Meback]

Originally posted by kaput
Here are some good statistics about the current market for you to consider. Draw your own conclusions.

http://calgaryrealestatereview.com/

You trying to tell me to wait it out?

[barmanjay]

Originally posted by Xtrema


If you are netting $2500/month, I guess you make around $44K a year. Putting $20K in an RRSP will net you around $6000 in tax refund.

IMO, unless you have other income, you will have tough time affording $280K home.

$1200 + $300 = $1500 just for the house and leave you with $1000 for food and car. A roommate is definitely recommended.


I just pulled pout my mortgage calculator

I'm not a mortgage broker,.. but keep it for hypothetical situations like this.

afaik: some lender will allow a gross debt ratio of 40%

32% of 44k/yr gives a monthly payment of 1173.33/mo.

over a 35 yr amort and lets say a 4.25% fix rate, he would theoretically qualify for a loan of $257,518.00

add his $55k down and he has a $310k max budget

he can find some nice townhouses for that much

[kaput]

.

[Mitsu3000gt]

If you can make more than the interest % you pay on your mortgage with other investments, take out a nice long mortgage like 35 years.

Also when approving you for a mortgage the banks assume all your credit cards and LoC's are maxed, so you can lower your limits on those if you need to raise your approval amount a little bit. At least that's what they did for me.

[CHICHARITZHI]

Originally posted by Meback
Hey guys,

I am thinking about buying my first home, but I really need some advice. I have no idea of how to strategically budget this. I am thinking of buying a townhouse for approximately 280,000.

I have about $55,000 saved up, and make about $2500 a month. I wanna pay about 1200 a month on the morgage alone, not including utilities, and I would most likely share the accomadation with a roommate.

-How much do you guys think I should put down as a down payment?

-How long should the term of my morgage be, and how long should it be amoritized for (if that makes sense, I still don't understand what amoritization is)?

- Realistically how much would I have to spend on a lawyer and on a realtor?

- How much money should I have on the side as an emergency fund?

- Are they any other hidden cost?

- typically how much are condo fees, and what does this cover?

(Please don't take into account the cost of applicances, furniture, entertainment systems, bedroom sets)

Do not buy a house if u are single because u will regret at the end.. its a big responsibility and less happiness...

[brucebanner]

Originally posted by Mitsu3000gt
Also when approving you for a mortgage the banks assume all your credit cards and LoC's are maxed, so you can lower your limits on those if you need to raise your approval amount a little bit. At least that's what they did for me.

Incorrect. Not all banks take your credit limits and input the information in as it is maxed. I know my broker did not do that and she said that most don't do that. She did say that some do (like RBC, if memory serves me correct).

For me, it wouldn't have mattered (I don't have access to large credit amounts) but for some, I do imagine it could hinder the size of a mortgage one could get if they went to deal with one of the few banks that do take your credit limits into consideration.

[Mitsu3000gt]

Originally posted by bruceod


Incorrect. Not all banks take your credit limits and input the information in as it is maxed. I know my broker did not do that and she said that most don't do that. She did say that some do (like RBC, if memory serves me correct).

For me, it wouldn't have mattered (I don't have access to large credit amounts) but for some, I do imagine it could hinder the size of a mortgage one could get if they went to deal with one of the few banks that do take your credit limits into consideration.

That would explain it then, my mortgage is through RBC :) . I had huge limits that I never used, so I reduced them and was able to buy a slightly better place.

[TomcoPDR]

Originally posted by CHICHARITZHI


Do not buy a house if u are single because u will regret at the end.. its a big responsibility and less happiness...

:werd: :werd: :werd:

[barmanjay]

Originally posted by CHICHARITZHI


Do not buy a house if u are single because u will regret at the end.. its a big responsibility and less happiness...

That absolutely depends on lifestyle,.. I know some single guys that are totally loving owning their own place.

[broken_legs]

Originally posted by barmanjay


That absolutely depends on lifestyle,.. I know some single guys that are totally loving owning their own place.


Sure..... Says the Realtor in the room. ;)



As far as owning and being single, if you can afford it, why not? Get some room mates so you aren't lonely. Get a hot tub, and start bringing over coke whores from the back alley and inviting your neighbours wife over for cocktails. I can't understand how being single and owning a house means less happiness, that's just silliness!

[project240]

Originally posted by broken_legs



Sure..... Says the Realtor in the room. ;)



As far as owning and being single, if you can afford it, why not? Get some room mates so you aren't lonely. Get a hot tub, and start bringing over coke whores from the back alley and inviting your neighbours wife over for cocktails. I can't understand how being single and owning a house means less happiness, that's just silliness!


So true.

A buddy of mine bought a house awhile back and has basically done just this. Every other time I call him on a Friday/Saturday night he's "relaxing with some lady friends in the tub" :poosie:

Pretty sure he wouldn't be as happy in an apartment.

[JordanLotoski]

What ever happened to owning a house for the one reason of Having a place to call home, Calgarians are sooo hung up on "investment" side of if they tend to forget that they are buying a home. Sure its always great to buy a house/condo that down the road will be an easy sell (based on location and property you choose)

Another point is, the sense of accomplishment you get when you own, this is Calgary guys, good luck finding a decent lady when your 35 and still renting (all truth)

If you guys thinking renting is better then owning thats your own opinion, Public transportation is cheaper then owning a car...Why own a car, you can be a 40 year old renter with no car and have a few bucks in the bank. :confused:

Flame away!

[broken_legs]

Originally posted by JordanLotoski
What ever happened to owning a house for the one reason of Having a place to call home, Calgarians are sooo hung up on "investment" side of if they tend to forget that they are buying a home.

Hung up on the investment side of housing??? I wonder where they got that idea?!!! :rolleyes:

*kicks the horse again*


Originally posted by JordanLotoski
As a buyers agent its not about selling just a house to my clients its about selling an investment. I want that inventment not only to be suitable for my buyer to live in for the next 3-5 years but to be great investment for the future. I have talked my clients out of lots of homes based on location or floorplan. Over the years I have made my clients alot of money based on getting them into the "right" home.

So I think when you say why do we need realtors...I guess "you" dont, perhaps your grouped in the 2% of people that are confident to take the largest investment of their lives and sell it. the other 98% of the population would rather leave it in the hands of a professional who lives , breaths, sleeps real estate as i do.





Originally posted by JordanLotoski
- Maybe cause historically real estate has been one of the best invesments.

- if your renting, it is always good time to buy, compared to pissing away your money to pay someone else's investment off.

-The only wrong time to buy is if your 30 years old living in your parents basement and the market is it its all time peak (2007) I guess maybe gamble and wait it out to see what happens

I take pride in what I do an I always look out for my clients best interest and make sure what their buying is a great investment.

[Pacman]

Originally posted by JordanLotoski

Public transportation is cheaper then owning a car...Why own a car, you can be a 40 year old renter with no car and have a few bucks in the bank. :confused:



Well said.

[JordanLotoski]

Originally posted by broken_legs


Hung up on the investment side of housing??? I wonder where they got that idea?!!! :rolleyes:

*kicks the horse again*







Your right, even myself gets caught up as seeing homes, including mine own as "investments" I think we as Calgarians have been tainted by the boom we had. Prior to that a house/Condo was bought to call HOME

[tirebob]

Originally posted by JordanLotoski
What ever happened to owning a house for the one reason of Having a place to call home, Calgarians are sooo hung up on "investment" side of if they tend to forget that they are buying a home. Sure its always great to buy a house/condo that down the road will be an easy sell (based on location and property you choose)

Another point is, the sense of accomplishment you get when you own, this is Calgary guys, good luck finding a decent lady when your 35 and still renting (all truth)

If you guys thinking renting is better then owning thats your own opinion, Public transportation is cheaper then owning a car...Why own a car, you can be a 40 year old renter with no car and have a few bucks in the bank. :confused:

Flame away!

No flaming necessary! I agree 100%... I wish I was smart enough to have gotten my shit together a lot earlier in life and bought a house and I would be in a much better place right now. In the grand scheme of things, I have spent as much or more on rent over the last 20+ years as I would have on a mortgage, yet I would have owned my home already and could have been using that money for other stuff, such as retirement planning, travel, toys, etc...

First thing I am going to do when my kids graduate and are working, is try and help them get into a place of their own (however cheap and entry level is necessary) as quickly as possible because in the long run it will help give them a decent chance at a better quality of life and security sooner than later!

I wish I was finishing my home mortgage at 40 rather than starting one. Don't get me wrong... I don't really have any "regrets" in my life, but I know I could have had things a lot easier right now if I had started earlier.

To all you guys in your 20's... Your next 20 years goes a whole helluva lot faster than your first 20 years, and if you do like I did, when you hit 40 I will bet many of you will be typing something similar to what I am right now! Hahahaa!

[broken_legs]

Originally posted by JordanLotoski


Your right, even myself gets caught up as seeing homes, including mine own as "investments" I think we as Calgarians have been tainted by the boom we had. Prior to that a house/Condo was bought to call HOME

This will come in useful later.

but for like the 5th time it's YOU'RE :)

[max_boost]

Originally posted by JordanLotoski
What ever happened to owning a house for the one reason of Having a place to call home, Calgarians are sooo hung up on "investment" side of if they tend to forget that they are buying a home. Sure its always great to buy a house/condo that down the road will be an easy sell (based on location and property you choose)

Another point is, the sense of accomplishment you get when you own, this is Calgary guys, good luck finding a decent lady when your 35 and still renting (all truth)

If you guys thinking renting is better then owning thats your own opinion, Public transportation is cheaper then owning a car...Why own a car, you can be a 40 year old renter with no car and have a few bucks in the bank. :confused:

Flame away!

True that man. Buy what you can afford is all I have to say!

[lint]

Originally posted by barmanjay



I just pulled pout my mortgage calculator

I'm not a mortgage broker,.. but keep it for hypothetical situations like this.

afaik: some lender will allow a gross debt ratio of 40%

32% of 44k/yr gives a monthly payment of 1173.33/mo.

over a 35 yr amort and lets say a 4.25% fix rate, he would theoretically qualify for a loan of $257,518.00

add his $55k down and he has a $310k max budget

he can find some nice townhouses for that much

And in the end the cost of borrowing for that $257.5K mortgage will be $235.3K and in total will cost $492.8K to pay back.

This is why is salesmen focus on the payments and avoid talk of the total cost.

[msommers]

One thing my parents suggested, and weren't sure why so many don't do this, is to pay your mortgage off weekly rather than monthly.

Max_Boost is spot on. So many Calgarians get caught up with the "keeping up with the Jone's" mentality they end up way further in debt and are strapped down.

There are so many factors to owning vs. renting as I'm slowly finding out that saying one or the other without knowing anyone's situation or goals is silly.

[max_boost]

Originally posted by msommers
One thing my parents suggested, and weren't sure why so many don't do this, is to pay your mortgage off weekly rather than monthly.

Max_Boost is spot on. So many Calgarians get caught up with the "keeping up with the Jone's" mentality they end up way further in debt and are strapped down.

There are so many factors to owning vs. renting as I'm slowly finding out that saying one or the other without knowing anyone's situation or goals is silly.

Yep. No two people have the same financial situation or lifestyle.

[t-im]

I definitely agree that people should really just buy what they can afford and STILL be able to live comfortably after - ie not spending the upper limits of what you've been preapproved for. I think a lot of people (especially new grads) think they're swimming in cash and start seeing nice/shiny property and think "well i'm making great money now and it'll only go up from here. Lets go buy an expensive apartment since everyone else seems to be doing that!"

I've encountered a lot of people who don't want to "settle" for something even a few years old because cosmetically it's not as 'flashy' as a new development. Yeah but that new development is $100k more.....

[anarchy]

Originally posted by Meback
Hey guys,

I am thinking about buying my first home, but I really need some advice. I have no idea of how to strategically budget this. I am thinking of buying a townhouse for approximately 280,000.

I have about $55,000 saved up, and make about $2500 a month. I wanna pay about 1200 a month on the morgage alone, not including utilities, and I would most likely share the accomadation with a roommate.

-How much do you guys think I should put down as a down payment?

-How long should the term of my morgage be, and how long should it be amoritized for (if that makes sense, I still don't understand what amoritization is)?

- Realistically how much would I have to spend on a lawyer and on a realtor?

- How much money should I have on the side as an emergency fund?

- Are they any other hidden cost?

- typically how much are condo fees, and what does this cover?

(Please don't take into account the cost of applicances, furniture, entertainment systems, bedroom sets)

I purchased a townhouse last year - after upgrades/taxes it came out to 300k. Put down 10%, my mortgage payments are $1300/mo (including property taxes), my condo fees are $150 not including utilities.

You don't pay your realtor, the seller will pay for it. I built brand new and my builder provided a lawyer. I highly recommend you get a realtor to help you find a home.

I also have a roommate who pays $650/mo which helps a lot.

For what you're making, it's going to be tight but it's definitely doable, especially if you have a roommate. You just have to budget wisely.

[Chandler_Racing]

I've always viewed my place as an investment and home. People get so caught up on establishing a difference between the two.

I call it a home as it represents a permanent place for me to stay and not have to answer to a landlord. I call it an investment because in 20 years, I will own my own home and with 99.99% certainty - I can say that it will increase in value.

[broken_legs]

Originally posted by anarchy


You don't pay your realtor, the seller will pay for it.



hahahahaha ok man.
:nut:

[barmanjay]

Originally posted by lint


And in the end the cost of borrowing for that $257.5K mortgage will be $235.3K and in total will cost $492.8K to pay back.

This is why is salesmen focus on the payments and avoid talk of the total cost.

Damn Jack,.. I sense sand in your shorts. Did I do you wrong? You are right with your calculations though. In the end we all pay as much in interest. If I could make things better,.. believe me I would.

The lending institutions are the real ones that are making serious money off us.

this,..unfortunately for the majority of homeowners is the harsh reality in home ownership,.... maybe you can look at it this way,.. you can pay someone elses bank and have no say in what to do in your home,.. or you can pay your bank and do what you want in your own home and in 35years or less you will have 99.99% ownership (.01% - you only own surface rights,.. you don't own the minerals on whats underneath your property).

Most of us are all paying a bank in one way or another; it comes down to pride of ownership and a bit of freedom from certain rules.

I was just giving a hypothetical scenario,.. I can't suggest whats good for him or not, only he knows that.

If he goes his route at a property worth $280k,.. less 50k downpayment (keep the 5k aside for emergency fund)

that would give him a loan amount of $230k

Over 35 years @ 4.25% makes his payments at $1048/mo = total interest paid would be 210,140.00 = gross of 440+k

Qualifying based on a gross annual income of 39k with payments at 32%

Now if he got a variable interest rate,... let say at prime plus ??,.. so 2.75%,... for now until prime rate goes up again,.. his payments would be $851/mo = total interest paid would be $127,594.00 = gross of 357+k

again,.. I'm not a mortgage professional, but this is what my mortgage calculator spits out.

I don't know what else I can say?

[lint]

Originally posted by barmanjay


Damn Jack,.. I sense sand in your shorts. Did I do you wrong? You are right with your calculations though. In the end we all pay as much in interest. If I could make things better,.. believe me I would.

The lending institutions are the real ones that are making serious money off us.

this,..unfortunately for the majority of homeowners is the harsh reality in home ownership,.... maybe you can look at it this way,.. you can pay someone elses bank and have no say in what to do in your home,.. or you can pay your bank and do what you want in your own home and in 35years or less you will have 99.99% ownership (.01% - you only own surface rights,.. you don't own the minerals on whats underneath your property).

Most of us are all paying a bank in one way or another; it comes down to pride of ownership and a bit of freedom from certain rules.

I was just giving a hypothetical scenario,.. I can't suggest whats good for him or not, only he knows that.

If he goes his route at a property worth $280k,.. less 50k downpayment (keep the 5k aside for emergency fund)

that would give him a loan amount of $230k

Over 35 years @ 4.25% makes his payments at $1048/mo = total interest paid would be 210,140.00 = gross of 440+k

Qualifying based on a gross annual income of 39k with payments at 32%

Now if he got a variable interest rate,... let say at prime plus ??,.. so 2.75%,... for now until prime rate goes up again,.. his payments would be $851/mo = total interest paid would be $127,594.00 = gross of 357+k

again,.. I'm not a mortgage professional, but this is what my mortgage calculator spits out.

I don't know what else I can say?

Just presenting arguments from the other side and calling out the bias that comes from most/majority of realtors. The reason lending institutions can make serious money off of us is because of terrible advice like taking out a 35yr mortgage to afford the monthly payments for the privilege of owning vs renting. The bank makes a killing on the interest, AND the realtors make higher commissions since the poor sap can now "afford" a bigger house.

I know it's not a realtor's job to help clients manage their own finances, but as broken_legs has pointed out, if you market a home as an investment of any sort, don't you think there is a measure of responsibility to present ALL the info so that they can make a fully informed decision?

It's much easier making a sale with a $1173.33 monthly payment compared to a true cost of $490K for that $310K townhouse, isn't it?

[Rarasaurus]

This argument can go on forever. There are advantages to both buying and renting depending on where you are in your life. Even if the total cost is 490k. The value of the home will likely be that or higher due to inflation in 35 years. When renting you pay someone elses mortgage and 35 years down the road they will have the house value and you will have nothing. Renting however does offer more freedom and you are not tied down(Even this can be argued).

Biggest thing for me is pride of ownership, not paying someone elses mortgage and the freedom to do what I want with the house. That for me is worth the 500 a month over renting.

[broken_legs]

The biggest thing i see that sounds stupid to me is when people point out how they have been renting for 5-10-15 years and could have been paying down their own house.

Well just out of curiosity, did you live in the same place for 5-10-15 years? Have the same job for 5-10-15 years? Have the same family, personal life for 5-10-15 years?

It's stupid to buy a house 'just because'. You can't compare moving around in your late teens and early 20's while going to school or doing whatever you were doing to settling down and owning a house. It's completely different.

[kaput]

.

[max_boost]

Originally posted by Rarasaurus
This argument can go on forever. There are advantages to both buying and renting depending on where you are in your life. Even if the total cost is 490k. The value of the home will likely be that or higher due to inflation in 35 years. When renting you pay someone elses mortgage and 35 years down the road they will have the house value and you will have nothing. Renting however does offer more freedom and you are not tied down(Even this can be argued).

Biggest thing for me is pride of ownership, not paying someone elses mortgage and the freedom to do what I want with the house. That for me is worth the 500 a month over renting.

Ya, housing to keep pace with inflation. Also a way to save money.

Say renting cost you $1300 all in. Owning cost you $2600 all in (0 down) for same property.

For the renters out there, can you save the $1300 difference?

BTW, my math isn't exact, I'm just guessing :rofl:

[HuMz]

I just purchased a home for 305,000 and put down roughly 60 grand to avoid paying the insurance.

Just a couple of things to keep in mind based on what I went through.

My house was assesed last week, and it was $4000 less then my purchase price. So as a last minute thing today I had to come up with 4 grand to give to my lawyer today to write the final cheque.

Also don't leave things to the last minute, it takes a while and I had quite a few people drop the ball between my insurance company and the lender. So try and have your insurance and the final mortgage documents signed at least 3 weeks before you take possesion.

[HuMz]

I should also add I added 20,000 into a RBC RRSP account last november. Therefore I was able to take out 20,000 interest free and I recieved an extra $5000 on my tax return I was able to contribute to my downpayment as well.

I raised my RSP contributions a few bucks an hour so i'll have that 20, 000 payed back within 3 years. (I think they give you 15 years to pay it back)

[Rarasaurus]

Originally posted by max_boost


Ya, housing to keep pace with inflation. Also a way to save money.

Say renting cost you $1300 all in. Owning cost you $2600 all in (0 down) for same property.

For the renters out there, can you save the $1300 difference?

BTW, my math isn't exact, I'm just guessing :rofl:

The difference is not that large. On a condo from renting to owning I think it is about 400 a month and on a house you are looking at around 500 to 600 for a 1800 sq ft front garage. From what i have seen.

[max_boost]

Ya that's the other thing, if you have some money saved aside, you don't have to rush out and buy a place right away. It's nice having a reserve fund for whatever purpose and keep renting. It's comforting actually, especially when you are uncertain about market conditions, the recession etc. Keep your sanity in tack instead of so much speculation. Buy when the time is right for you, forget what everyone else is saying.

[broken_legs]

Originally posted by HuMz
I should also add I added 20,000 into a RBC RRSP account last november. Therefore I was able to take out 20,000 interest free and I recieved an extra $5000 on my tax return I was able to contribute to my downpayment as well.

I raised my RSP contributions a few bucks an hour so i'll have that 20, 000 payed back within 3 years. (I think they give you 15 years to pay it back)

See this really gets me. I guess if you have awesome cash flow and money ain't no thang, then this is a good strategy.

All I really see when people cash in their retirement to buy a house is them taking on ANOTHER LIABILITY. They now HAVE to pay back their RRSP on a 15 year term.

Sure in the short term it makes perfect sense, but I'm not so sure everyone is fully accounting for the costs of owning a house and then paying that money back - Of course if it was only a few grand then who cares. Im talking about 10s of thousands that must be replaced.

To add some more:
For those who think housing will keep up with inflation, maybe so - However, look at whats happening in the US. The stock market is flying, housing is taking a double dip.

Supply and Demand > Inflation in some cases. Just something to think about. Can you beat the return on your house with your RRSP? Is the money you save on interest on the house worth it? Time for another spreadsheet.

[lint]

Originally posted by HuMz
I raised my RSP contributions a few bucks an hour so i'll have that 20, 000 payed back within 3 years. (I think they give you 15 years to pay it back)

Don't confuse paying back the amount borrowed for the HBP with new contributions to your RRSP.

[lint]

Originally posted by kaput
I have to disagree with this. It's not bad advice on the part of the lending institution, it's a complete lack of financial intelligence on the borrowers part. I wish they still had 40 year mortgages. With a little discipline, you could pay off a longer mortgage much faster and pay less interest by simply purchasing a 35-40 year term and applying the monthly difference (relative to a 25 year term) directly to the principle. Minimum commitment, maximum flexibility.

herein lies the problem

[HuMz]

Originally posted by lint


Don't confuse paying back the amount borrowed for the HBP with new contributions to your RRSP.

I just had my 20,000 in a standard money market fund RRSP, I did use it for the HBP. But the money coming off my cheques as part of the work RRSP program still counts as paying back the 20,000 I used for the HBP.

There different accounts of course, but there both RRSP eligble so the work plan contributions still count toward paying the 20 grand back.

[lint]

Originally posted by HuMz
I just had my 20,000 in a standard money market fund RRSP, I did use it for the HBP. But the money coming off my cheques as part of the work RRSP program still counts as paying back the 20,000 I used for the HBP.

There different accounts of course, but there both RRSP eligble so the work plan contributions still count toward paying the 20 grand back.

If you can, make the min repayment to your HBP and direct the rest of it towards new contributions. Reason being: you don't get to double dip the tax advantage when you repay the HBP.

[masoncgy]

Originally posted by lint
It's much easier making a sale with a $1173.33 monthly payment compared to a true cost of $490K for that $310K townhouse, isn't it?

Why are you blaming the realtors for what is ruthless lending practices on the part of our banks? Realtors don't set interest rates or force anyone to sign mortgage documents that are questionable or unfavorable.

Housing would be far more affordable if the banks weren't raking in major coin on mortgage interest. There was a time that all a person needed to pay was 3-months interest to break open or re-finance a mortgage... now you get slaughtered with huge IRD penalties. Most people refinance to borrow MORE money... the banks go for a quick cash grab anyway and then continue with interest charges.

You seem to let personal accountability slip. If people are dumb enough to spend beyond their means, then really, the only people at fault for that is themselves.

Case in point... I was just approved to spend $400K on Vancouver Island to buy a property... I purchased one for $250K instead... no one put a gun to my head in either scenario. No 'slimy realtor' forced me to buy anything either.

Your home is as much an investment as it is your home... it takes hard earned money to purchase it and to keep it going. So, do you want to give your landlord his retirement off your sweat or do you want your own retirement package? That's the question.

[barmanjay]

Originally posted by lint


Just presenting arguments from the other side and calling out the bias that comes from most/majority of realtors.......


It's much easier making a sale with a $1173.33 monthly payment compared to a true cost of $490K for that $310K townhouse, isn't it?


Valid point Jack, I see ads all the time from other realtors stating monthly payments.

I just state the asking price,.. people always ask me what the monthly payments would be,... so I keep a mortgage calculator handy for that.

Not as bad as car sales though. Ads are plastered everywhere with monthly payments and low/no down.

[roopi]

Originally posted by HuMz
I just purchased a home for 305,000 and put down roughly 60 grand to avoid paying the insurance.

Just a couple of things to keep in mind based on what I went through.

My house was assesed last week, and it was $4000 less then my purchase price. So as a last minute thing today I had to come up with 4 grand to give to my lawyer today to write the final cheque.

Also don't leave things to the last minute, it takes a while and I had quite a few people drop the ball between my insurance company and the lender. So try and have your insurance and the final mortgage documents signed at least 3 weeks before you take possesion.

:confused: :confused: :confused:

So you bought a house for $305,000 and it was assessed at $301,000 last week so then you gave your lawyer $4000? Am I missing part of this story?

[bspot]

Originally posted by CHICHARITZHI


Do not buy a house if u are single because u will regret at the end.. its a big responsibility and less happiness...

Getting hammered in the hot tub with my roommate and whoever we met up with downtown that night or partying out on the deck beg to differ.

It's definitely work, but I kind of actually enjoy the yard work and little jobs around the house.

Cleaning sucks, but you have to do that anywhere.

I'd wait though. Keep getting pre-approved for mortgages to hold your rate (they are negotiable, never take what they offer) and see how things go.

Good luck!

[lint]

Originally posted by roopi
:confused: :confused: :confused:

So you bought a house for $305,000 and it was assessed at $301,000 last week so then you gave your lawyer $4000? Am I missing part of this story?

the lawyer holds the funds in trust until everything is finalized

[Jim Rome99]

Originally posted by JordanLotoski
this is Calgary guys, good luck finding a decent lady when your 35 and still renting

You are a real estate agent? You don't even know how to use the word "you're" properly. You are trying to tell us we're losers if we don't own a house at age 35?

HAHAHAHAHAHAHAHAHAHAHAHAHAHA

Maybe for you this is true, but for my friends and I, we don't tend to see any correlation between the pussy we get and our step on the socio-economic ladder you seem to dream about. This is truly hilarious. I do quite well financially for a guy my age, but I picked up my current girlfriend when I was a poor student without a car or any money in the bank. She's a knockout. Again, hilarious. You a great example of why so many people put real estate agents slightly below used car salesmen and drywallers on the scumbag ladder.

[roopi]

Originally posted by lint


the lawyer holds the funds in trust until everything is finalized

Still doesn't make sense.

House Purchased for $305000 and then assessed at $301,000. So you give an additional $4000 would give you $309000.

What does a assessment have to do with this anyways since you've already agreed to purchase the house for $305000 it doesn't matter what it is assessed at.

[Cos]

^^ the lawyer took 4k extra to line his pockets :dunno:




My take on it, we make a lot more money than you (household is around 5200) but I love having my place. We live well, go out once a week for food/booze, have a truck to pay off, but at the end of the month after paying utilities, taxes, condo fees, gas/truck, savings, slush fund (you need one of these for emergencies) there isnt a ton left. I think our monthly bills are around 4k.

If you are making 2500 a month I would either look for a cheaper place or a roomate. As soon as winter comes around and your gas skyrockets, or you want a new TV, or the dryer that came with the house dies (I'm not bitter) you cant be running to your CC to cover those costs.

As for everything else, with 55k down, it is really up to you and what you think is best. I would try and get you under the CMHC fees but mine were 8k on a 300,000 place so honestly it wasnt as bad as taking out a crap load of cash to put down to avoid 8 grand, it would have cost me much much more. If you have any specific questions I am happy to try and help as a person who just bought a house 3 months ago.




I am interesting in hearing what Lint's story is.

[rc2002]

Originally posted by roopi

Still doesn't make sense.


+1

The purchase price is already agreed upon if the seller has accepted the offer. Any assessed value (city or bank) will have no bearing on it. The city assessed value helps determine property tax, and the bank assessed value ensures that the bank is making a proper loan.

The $4k is not due to the change in assessment price. It is likely due to a deposit held in trust for interest charges that may be incurred if payment is later than posession date. It might also be for retroactive property tax or utilities that the previous owner has incurred after the posession date. Either way, $4k is steep. I would talk to your lawyer about that and get more detail.

[barmanjay]

That just means the lender sent out their own appraiser and is only willing to lend up to 301k,.. so he had to come up with the extra 4k to make up the difference.

[thepyrofish]

Originally posted by HuMz
I just purchased a home for 305,000 and put down roughly 60 grand to avoid paying the insurance.

Just a couple of things to keep in mind based on what I went through.

My house was assesed last week, and it was $4000 less then my purchase price. So as a last minute thing today I had to come up with 4 grand to give to my lawyer today to write the final cheque.

Also don't leave things to the last minute, it takes a while and I had quite a few people drop the ball between my insurance company and the lender. So try and have your insurance and the final mortgage documents signed at least 3 weeks before you take possesion.
Just want to mention how good this advice is. We finally sat down today at the lawyers and signed everything. We take possession on the 28th :eek:

[Mys73ri0]

the last 3 pages have been argument about shit that doesn't help the OP at all... he's asking what ammortization is and you guys are going off on a bunch of random stuff... (some not all) how about keeping this on topic?

Originally posted by Meback
Hey guys,
I am thinking about buying my first home, but I really need some advice. I have no idea of how to strategically budget this. I am thinking of buying a townhouse for approximately 280,000.Is your final purchase price $280k or on top of your $55k downpayment?

I have about $55,000 saved up, and make about $2500 a month. I wanna pay about 1200 a month on the morgage alone, not including utilities, and I would most likely share the accommodation with a roommate.
First thing is, don't rely on your roommate being there forever to help you with half your mortgage payments. If you read through beyond you'll see more than your fair share of horror stories amongst roommates and friends. Ask around in real life, I'm sure you'll find more horror stories than awesome stories especially if you dig a little deeper. Everyone says "yea its great having a roommate" until you ask a couple more questions. Be prepared to pay the FULL amount on your own, money you get from roommates should be extra to help pay down your house sooner not something to be relied upon.

http://www.bretwhissel.net/cgi-bin/amortize
if you use that calculator it will give you an approximate idea how big your mortgage will be if you want to spend $1200 a month on mortgage payments ONLY.
Enter the following:
pmt per year: 12
interest rate: 4.25 % (this could vary depending on your type of mortgage)
# of reg payments(aka ammortization in months): 420
payment amount: 1200
leave the rest blank and hit calculate - you can play around with the numbers to get what you want

-How much do you guys think I should put down as a down payment?
that depends on you, is paying off your house priority #1 or is partying and having fancy toys #1? that's a personal preference.
-How long should the term of my morgage be, and how long should it be amoritized for (if that makes sense, I still don't understand what amoritization is)?
Ammortization is the length of the actual mortgage. So when someone says the ammortization is 35 years. That mean you'll be making your mortgage payments for 35 years (or 420 months). Something related would be the actual term, TERM - which talks about how long your current mortgage 'contract' is for before you have to renew it. How long you want your mortgage (ammortization)for is up to you, in terms how fast you want to pay it down. The maximum you are allowed is 35 years.

- Realistically how much would I have to spend on a lawyer and on a realtor?
Lawyer fees are generally the same wherever you go. A broker or someone from the bank can give you an estimate on that. You won't pay anything OUT OF POCKET on top of the price of the property for using a Realtor, however some people feel the cost of a Realtor is built into the price of home. (please debate this somewhere else?).

- How much money should I have on the side as an emergency fund?
The recommendation is usually 1% to 1.5% if the cost of the home for any sort of last minute things that may appear.

- Are they any other hidden cost?
Something that a lot of people don't know about is CMHC/genworth cost. If you put less than 20% of the purchase price as your down payment, you will be required to pay insurance coverage. This coverage is for protection of whoever (usually one of the big 5 banks) is loaning you the money it is not for your benefit. Costs for this depends on your mortgage size and how large your down payment is. In relation to your question about how much you should put for your downpayment. If you have enough money to avoid CMHC/Genworth insurance it would be a good idea as it saves you that money.

- typically how much are condo fees, and what does this cover?
Condo fee varies depending on the type of property you're buying. You'll have to look at MLS listings to get a general idea. Most listings will say how much the condo/townhouse fees are and what they cover. It varies from property to property.

(Please don't take into account the cost of applicances, furniture, entertainment systems, bedroom sets)
The cost of these things is something you need to consider. If you're currently living with your parents, the cost of all this stuff plus the basics like vacuum cleaner, dishes, washroom crap and other random stuff can add up quick.

Here's a couple of other things to consider. Think about whether you want to live in this home for the long term or Calgary for that matter. Something else is could your job force you to move somewhere else? If they do are you prepared to walk away from your house and potentially lose a lot of money? If you want to get out of your mortgage term early (most people set at 5 years) you will pay a penalty for it.

I'll reiterate again, take your list of questions and find a mortgage broker or someone at a big bank and ask them. If they won't help you move on to someone else. Plenty of people out there who'd love your business. If you talk to someone who doesn't want to help you or not very helpful in explaining things and just 'expects' your business I'd move on as they won't 2 shits about you if something goes wrong down the road.

Don't want to clutter his thread anymore with stuff he may not understand, but dumping all that cash into his RSP to get the HBP may not be best idea. Have any of you considered that his income is still fairly low in comparison to what he may earn in the future? The tax benefits in the future will be a lot higher than right now.

[rc2002]

As for HBP, keep in mind that you're paying back the HBP loan with after tax income. And that after tax income is going to be taxed again when you start withdrawing your RSPs.

I found there are only two ways for HBP to be worth it:

1.) You take out HBP and invest it, making better returns than the opportunity cost of carrying that incremental mortgage amount. The first few years of mortgage payments are heavily interest weighted and light on the principal. Lowering the entire ladder of mortgage payments by making a lump sum will save you more money than you think.

2.) You don't have enough of a downpayment to avoid CMHC. Depending on CMHC fees, if the HBP lets you avoid it then it could be worth it. I didn't look into this thoroughly since CMHC didn't affect me.

[Mys73ri0]

.

[Jim Rome99]

Originally posted by richardchan2002
As for HBP, keep in mind that you're paying back the HBP loan with after tax income. And that after tax income is going to be taxed again when you start withdrawing your RSPs.

Not necessarily true. I contribute $8.50/hour into my RRSP account, and my employer puts in $1.50. I'm putting $400 into my RRSP account every week. I get paid bi-weekly, so none of that $800 is after-tax income. I get the tax break on every single pay cheque. Many, if not most, employers have similar programs.

[rc2002]

Originally posted by Jim Rome99


Not necessarily true. I contribute $8.50/hour into my RRSP account, and my employer puts in $1.50. I'm putting $400 into my RRSP account every week. I get paid bi-weekly, so none of that $800 is after-tax income. I get the tax break on every single pay cheque. Many, if not most, employers have similar programs.

You're confusing HBP with normal RRSP. Your normal RRSP contributions are tax sheltered.

But when you withdraw from your RRSP to pay for a house under the HBP, you have to repay. Those repayments are no longer tax sheltered, and you make those repayments with after tax income.

[Jim Rome99]

Originally posted by richardchan2002


You're confusing HBP with normal RRSP. Your normal RRSP contributions are tax sheltered.

But when you withdraw from your RRSP to pay for a house under the HBP, you have to repay. Those repayments are no longer tax sheltered, and you make those repayments with after tax income.

Anything you fail to pay back is added onto your taxable income at a rate of 1/15 of the total amount you withdrew. Example:

Take 25000 out now and buy a house. Re-contribute nothing next year.

Earn 80k next year. You will be taxes as though you earned $81,666 instead of 80k.

If you contribute $1,666, you fulfill your repayment requirements for that year. Any contribution in excess of that amount is tax sheltered.

Keep in mind that you pay it back to yourself interest-free over a period of fifteen years. That's a great deal man, I don't understand how you can say it is anything less.

[lint]

Originally posted by Cos
I am interesting in hearing what Lint's story is.

what story? Im tired of hearing about how it's always better to buy vs rent, how affordable the houses are in this city, how fundamentals don't apply to Calgary, and why it's wrong to question the nobility of realtors and how much they're worth.

If you can't afford a house on a 25 yr mortgage, you can't afford the house. If there wasn't a glut of easy credit and creative mortgage products so that people couldn't buy houses they can't afford maybe house prices would be more reasonable in this city.

[Meback]

Hey fellas,

This is absolutely fantastic with the number of contribution made from members who have already gone through the process. The information, whether or not related to my initial questions, are all very helpful. It is a definite plus to see which approach people take/ or consider when purchasing your first home. I encourage that the discussion continue, as it is going to help a lot of people take the plunge.

A very big thank-you to Mys73ri0 for answering my questions!! I will definitely consider ALL the things that you have mention in that post.


Originally posted by Mys73ri0
Is your final purchase price $280k or on top of your $55k downpayment?

The 280k would be the final price. I would be taking out a mortgage of approximately 225-230k.

I calculated that would be ~18%. I definitely want to avoid that dreadful CMHC/Genworth insurance.

YIKES!! I also did some calculations with that amortization calculator, and it is absolutely insane in regards to how much interest you would have to pay after 30 years. Depending on the fluctuation in rates the interest is going to be ~265k (give or take a couple of tens of thousands) after everything is said and done! Definitely something to consider.

[Cos]

Originally posted by lint


what story? Im tired of hearing about how it's always better to buy vs rent, how affordable the houses are in this city, how fundamentals don't apply to Calgary, and why it's wrong to question the nobility of realtors and how much they're worth.

If you can't afford a house on a 25 yr mortgage, you can't afford the house. If there wasn't a glut of easy credit and creative mortgage products so that people couldn't buy houses they can't afford maybe house prices would be more reasonable in this city.

I meant the story about the 4k you had to cough up.

[ExtraSlow]

The huge amount of interest isn't that surprising if you think of like what it is, the largest purchase most of us will ever make.
Hell, you'd be expecting to pay lots of interest if you bought yourself ten Accords . . . .

[rc2002]

Originally posted by Jim Rome99


Anything you fail to pay back is added onto your taxable income at a rate of 1/15 of the total amount you withdrew. Example:

Take 25000 out now and buy a house. Re-contribute nothing next year.

Earn 80k next year. You will be taxes as though you earned $81,666 instead of 80k.

If you contribute $1,666, you fulfill your repayment requirements for that year. Any contribution in excess of that amount is tax sheltered.

Keep in mind that you pay it back to yourself interest-free over a period of fifteen years. That's a great deal man, I don't understand how you can say it is anything less.

Exactly. That $1,666 is not tax sheltered. Meaning it's $1,666 of after tax income. You'll be taxed again on that $1,666 when you start pulling money out your RRSPs.

Interest free loan sounds good. But that loan money would've been earning money inside your RRSP tax free if you didn't participate in HBP. So the opportunity cost of putting it towards your house is offset by the lack of gains within your RRSP.

The only way HBP would be advantageous is if you can do better with that money outside your RRSP than inside.

Using the HBP money in a GIC doesn't work because interest income is taxed at the marginal rate. Using the HBP money to buy stocks has too much risk and you still pay capital gains tax. Using the HBP money towards your mortgage is a pretty complicated calculation because you have to factor in the scheduled reduction of your mortgage payments as you apply lump sum principal against the gains you get in your RRSP when you repay the HBP installments.

For myself, I wasn't able to come up with a model where HBP was better than withdrawing my RRSPs. The only place I could see it having potential is in avoiding CMHC fees.

[lint]

Originally posted by Cos
I meant the story about the 4k you had to cough up.

that wasn't me

[Euro_Trash]

Originally posted by Jim Rome99


You don't even know how to use the word "you're" properly.


Originally posted by Jim Rome99


You a great example of why so many people put real estate agents slightly below used car salesmen and drywallers on the scumbag ladder.

Couldn't resist, sorry dude ;)

[broken_legs]

Originally posted by Jim Rome99

You a great example of why so many people put real estate agents slightly below used car salesmen and drywallers on the scumbag ladder.

Below dry wallers?

Still, real estate agents are somewhere above Dead Beat Online Construction Worker Trolls

[Sugarphreak]

...

[barmanjay]

Originally posted by broken_legs


Below dry wallers?

Still, real estate agents are somewhere above Dead Beat Online Construction Worker Trolls


I think I like you :D

[masoncgy]

How in the hell are plumbers not above used car salesmen on the scumbag ladder? :dunno:

[msommers]

They play with shit all day ;)

[Jim Rome99]

Originally posted by Euro_Trash




Couldn't resist, sorry dude ;)

That's awesome dude, seriously. Gude quote.

[HuMz]

Originally posted by roopi


:confused: :confused: :confused:

So you bought a house for $305,000 and it was assessed at $301,000 last week so then you gave your lawyer $4000? Am I missing part of this story?

Nope, my mortgage required me to have an assesment done.
My appointment with the lawyer to sign the final documents was done yesterday afternoon. I was supposed to call the builder and find out the final price so I could write the total purchase price. So that morning I did only to find out my house was appraised at $4000 less then my purchase.

To say the least I was not the least bit impressed. Most people don't have 4 grand kicking around esspecially on 5 hours of notice.

And unfortionately I leave for vacation on friday so theres no way I could have refused to sign the documents in time to see if I could challenge the assesment. (My possession date is on june 30)

[HuMz]

Originally posted by roopi


Still doesn't make sense.

House Purchased for $305000 and then assessed at $301,000. So you give an additional $4000 would give you $309000.

What does a assessment have to do with this anyways since you've already agreed to purchase the house for $305000 it doesn't matter what it is assessed at.

When you go with a conventional mortage (20%) most mortgage companies will require one to be done.

I only had about 15% down until 3 weeks ago when I was able to come up with enough to match the 20% down so I didn't have to pay insurance.


Therefore the money is going right to my mortgage (not like anyones pocketing it) so instead of having a 244,000 mortgage its now 240 000.

Its just absolute bullshit in my mind to give the assement back (knowing that its 4 grand owing) and to tell the home buyer the same day as hes supposed to write the cheque. I didn't get any kind of a heads up prior to the chance of this happening, so its one thing the OP has to keep in mind that he could be owing money come assesment time.

[cdnsir]

So interest rate dropped. Not by a lot, but I'm surprised by this move.



CIBC drops residential mortgage rates, following moves by other banks
Fri Jun 25, 9:59 AM
The Canadian Press

By The Canadian Press

TORONTO - CIBC (TSX: CM.TO) has shaved 0.1 percentage points off a number of its residential mortgages, following similar moves on Thursday by several of the major banks.

The move drops the bank's benchmark posted five-year fixed rate to 5.89 per cent.

RBC Royal Bank (TSX: RY.TO), TD Canada Trust (TSX: TD.TO) and Bank of Montreal (TSX: BMO.TO) all lowered most their posted fixed-term mortgages by one-tenth of a point.

The announcement leaves the banks' variable-rate mortgages where they were.

Canadian banks raise or lower their rates for fixed-term mortgages in response to trends on the bond markets. In contrast variable-rate mortgages go up or down when the banks adjust their prime rates.

Prime rates last changed on June 1, rising by one-quarter of a point after the Bank of Canada increased its policy rate from an all-time low.

[Swank]

As far as an emergency fund goes I've always aimed to have enough to replace the furnace. If that craps out on you in winter you want to be able to replace/repair it in a heartbeat. Anything else that breaks that isn't covered by insurance should cost less than that so as long as you have furnace money you should be ready for anything.

[npham]

Originally posted by Sugarphreak


*forth was because I didn't have a mortgage during the construction period I didn't have any payments to make, but I was still able to take advantage of the rising housing market.



They can easily bump the price of your house up once it is completed to make it fall in line with the market. You may think it will only cost you 300K but once you finally sign off on the house, the going price is 315K and you are on the hook for that 15K as well. At list point, you may or may not be able to walk away. You have your dream house, but now can't afford the extra 15k for whatever reason. You are right that you do not make mortgage payments, but you are definitely not taking advantage of the "rising" housing market.