buy now or wait until I have 20% down?

[sham_ip]

Hi guys,

I'm 1'st time home buyer, and thinking to buy a property for up to 280K. I can put 12% down so i have to buy CMHC insurance. If I wait about 10 months, I can afford the 20% down, and then I don't need to buy CMHC insurance and that saves me some $. I'm currently renting a condo for $1100.

So is it better to buys now, or wait until I have 20% down?

Thanks

:dunno:

[bitteeinbit]

See the thread just a bit below yours: "2/3 Alberta owners wish they'd waited to buy a first home".

Not based on any expertise really, but I suggest waiting 10 months. If you had said 2-3 years it would be different but 10 months is nothing. Prices might actually decrease by then (or not, lol).

[jdmXSI]

When does your current lease expire? Can you get a month to month extension while you're saving the extra down payment? Also, are you buying a new build or something that you were planning to take an immediate possession on?

[Sugarphreak]

...

[Type_S1]

Only 10 months? Wait until you have the 20%.

Most people would have to wait ~3-5 years to make their 20% which in that case I say take the CHMC hit.

[Disoblige]

Originally posted by Sugarphreak
Wait until you have 20%

[Feruk]

I think if you can't put 20% down, you shouldn't be buying. I'd wait till you had the 20%.

[CapnCrunch]

Originally posted by sham_ip
Hi guys,

I'm 1'st time home buyer, and thinking to buy a property for up to 280K. I can put 12% down so i have to buy CMHC insurance. If I wait about 10 months, I can afford the 20% down, and then I don't need to buy CMHC insurance and that saves me some $. I'm currently renting a condo for $1100.

So is it better to buys now, or wait until I have 20% down?

Thanks

:dunno:

How much is CHMC if you have 10% down?

2 things you should think about.

1. What will interests rate do over that time? (I'm guessing not much)
2. House prices usually go up in the spring-early summer. The best time to get a deal is in December.

If you're looking a 10K in CHMC fees, then wait. If it's only a few thousand, you might find you'll save that by buying near Christmas.

[BananaFob]

http://www.ottawacitizen.com/business/mortgages/smaller+down+payments+lead+better+mortgage+rates/6550872/story.html

[chibwack]

Correct me if I'm wrong, but bigger downpayment=lower interest rate, so I'd wait.

[Type_S1]

Originally posted by chibwack
Correct me if I'm wrong, but bigger downpayment=lower interest rate, so I'd wait.

Wrong...completely wrong.

[dj_patm]

I've decided I'm going to do the 5%-10% downpayment because:

a) I plan on buying a home that is well within a comfortable budget with easy monthly payments which (if all goes as planned of course) I will eventually turn into a rental property way down the road.

b) I'll take the rest of the money I save to buy furniture, BBQ and the like.

c) I can't bare waiting to move out any more.

[bigbadboss101]

Hmm might depend on the lender and lendee. When I was suggesting I want to put 5% down the lender said they cannot offer me a good rate. Ended up putting 25% and prime minus.

[Sugarphreak]

..

[msommers]

10 months doesn't seem like much but what are the numbers?

At $1100/month for rent, that's $11,000.

Now how much would an additional $11,000 + mortgage interest + CMHC be? Keeping things the same and very basic, 25 year amort. + say 4% interest, paying monthly (wouldn't suggest if possible).

1) 12% down of 280K = 33,600. Therefore mortgage is $246,400.

Interest paid: $143,776.99
CMHC paid@2%: $4,928.

2) 20% down of 280K = 56,000. Therefore mortgage is $224,000.

Interest paid: $130,705.18
Rent paid: $11,000.

Difference: $4999.81 in favour of #2.

**Someone should check my numbers and that I've done this properly.

[max_boost]

Possible to borrow the remaining money from family?

[InRich]

just wait.

[Sugarphreak]

...

[Mibz]

Originally posted by Sugarphreak
You should even be considering more aggressive payments and lump sum payments once a year to help with this. We've saved a little under $100,000 in interest by doing aggressive schedule + 20% higher payments + a single lump sum within the first 2 years. It's mind blowing how much you save with a little extra.

[Crystalrw]

Put down as much as you possibly can. I would wait until you have 20%... while you may be focusing on the monthly payment, I prefer to think about what the overall purchase price for the house will be.

If you're considering using part of your downpayment to buy furniture, here is some advice: I bought a house in 2010 and one of the lessons I learned is not to buy brand new furniture, especially if you have a pet. My $3000 italian leather sofa set is mangled in under 2 years. If I could have done it again, I would have bought most of my furniture off Kijiji.

[Mibz]

I think you should rephrase that to say "Don't buy brand new furniture unless you have pets that will mangle your brand new furniture". If you're capable of keeping your shit in good condition then there's no reason not to buy new.

[Crystalrw]

I get where you're coming from, Mibz. Maybe I should say "Don't buy brand new furniture unless you have pets or friends that could mangle your brand new furniture". My sister gouged my $900 dining table 30 minutes after I finished setting it up. :facepalm:

I've really had to learn to let go of any attachment I have had to my belongings and my hardwood floor.

But really, I wish I'd saved some of the $20,000 I spent on furniture when I bought my house for a nicer car or even just to put in the bank.

[BananaFob]

Keep in mind that most mortgages allow you to pay principal off up to around 15% at each anniversary date of your mortgage term if you really do want to build equity faster. There is absolutely nothing wrong with putting down 5%.

Msommers, keep in mind that the CMHC fee is added to the principal and amortized... $5k over 25 years is nothing.

[msommers]

Originally posted by Sugarphreak
msommers, If you are going to include rent, you should also include housing costs such as strata fees, property tax and utilities that used to be included in rent.


Originally posted by BananaFob
Msommers, keep in mind that the CMHC fee is added to the principal and amortized... $5k over 25 years is nothing.

Yeah 5K didn't really seem like a hell of a lot to me either given the time frame. And with added fees that Nick mentioned, is it really a wash in the end and the guy could move into a home 10 months earlier?

[Mibz]

Originally posted by Crystalrw
I get where you're coming from, Mibz. Maybe I should say "Don't buy brand new furniture unless you have pets or friends that could mangle your brand new furniture". My sister gouged my $900 dining table 30 minutes after I finished setting it up. :facepalm:

I've really had to learn to let go of any attachment I have had to my belongings and my hardwood floor.

But really, I wish I'd saved some of the $20,000 I spent on furniture when I bought my house for a nicer car or even just to put in the bank. Yeah, I suppose it all depends on your tolerance for that sort of thing. I laid down my brand new bike the first day I had it and didn't care. Meanwhile if I throw a dirty rag on the hood of my wife's 10 year rusty car she gives me shit :P

[sham_ip]

Originally posted by msommers
10 months doesn't seem like much but what are the numbers?

At $1100/month for rent, that's $11,000.

Now how much would an additional $11,000 + mortgage interest + CMHC be? Keeping things the same and very basic, 25 year amort. + say 4% interest, paying monthly (wouldn't suggest if possible).

1) 12% down of 280K = 33,600. Therefore mortgage is $246,400.

Interest paid: $143,776.99
CMHC paid@2%: $4,928.

2) 20% down of 280K = 56,000. Therefore mortgage is $224,000.

Interest paid: $130,705.18
Rent paid: $11,000.

Difference: $4999.81 in favour of #2.

**Someone should check my numbers and that I've done this properly.

Thanks msommers,
Interesting calculations, I was not sure that I will save $ if I wait till I have 20$. I wanted to buy now to save the rent !!

[sham_ip]

Thank you guys for the feedback.. Most of you recommend waiting tilll I get 20% down..:zzz:

[G]

Why the rush to get yourself in quarter million debt? There will always be opportunities to do that.

[muse017]

I was planning on purchasing a condo with only 10% down while ago but then I decided to go for higher percentage(25%) based on calculation I did. I might be broke atm but in the long run I know I'll be better off and save a lot quicker with low monthly payment(950ish). Also 2.89% 3yr fixed with 20/20 option I got was an offer can't refuse and worth waiting another 6 or so months.

[dflamzer]

You're also neglecting the fact they expect house prices to spike sharply in the upcoming year.

[Abeo]

Originally posted by dflamzer
You're also neglecting the fact they expect house prices to spike sharply in the upcoming year.

"They" (CMHC and CREA) are expecting a 2.5% yearly increase. That's hardly beating inflation, and about the same the DP would increase if invested in a high interest savings account. Economists are predicting stable to lower house prices, depending on the region.

[dflamzer]

2.5% OVER $300,000 though would clear any substantial benefit though. It's sort of a wash situation.