Getting my first home

[t3rry]

hey all, im thinking of getting my first home because i am sick of room mates and the crap that comes with them.

but my problem is i have a bit of debt whichi would need consolidated into the home mortgage or i could never afford monthy payments... anyone that IS or knows a mortgage broker that could do this for me?

[sputnik]

You will really need to get rid of the debt first. You wont be able to consolidate it into the mortgage as the debt you have has no colateral to back it. The mortgage has the house as colateral and no bank is going to give you a mortgage for more than what the house/condo would be worth.

However, if you make enough money you might be able to make the mortgage payments and have the mortgage too.

ING Direct has some good calculators on their website to see what you can afford... and how much your monthly payments would be.

http://ingdirect.ca/en/acct_rate/mortgageindex.html

[t3rry]

yea, it'd take me 5 years to pay off my debt, and i really cant wait that long... can someone give me the winning numbers to next weeks super 7?



and if i amde more money i wouldn't have the debt :dunno:

[G]

If you can't afford both the debt and a new mortgage you are way over your debt ratio. There is no way a bank will approve you for a mortgage.

[t3rry]

G i realise that, thats why my only option is if some how some place will consolidate it for me

[QuasarCav]

over 40% debt to earnings = no mortgage

[t3rry]

Originally posted by QuasarCav
over 40% debt to earnings = no mortgage

thats not true, if you have i think it is 15% down thye dont even have to look at your debt ratio, the only reason most places say that is because there is some provincial insurance thing that you must get approved for if you put less than 15% down

[sputnik]

Originally posted by QuasarCav
over 40% debt to earnings = no mortgage

and only 32% (of 100%) can be the mortgage...

its this conversation that makes me glad i didnt go into debt buying new shiny cars and toys before i owned a house... i still shake my head at the kids who live at home and get a 5 year loan for a car that they can BARELY afford

[QuasarCav]

Originally posted by t3rry


thats not true, if you have i think it is 15% down thye dont even have to look at your debt ratio, the only reason most places say that is because there is some provincial insurance thing that you must get approved for if you put less than 15% down


It's the law, a lending establishment cannot legally give you a loan if it exceeds your Debt/earnings.

Down payment just lowers the amount financed, thereby lowering your debt load.

So your telling me a 20 year old with no job and 20g's in his back pocket can buy a house because he has a down payment??

[t3rry]

i never said that, i just said your debt ratio doesn't matter

[G]

Originally posted by t3rry


thats not true, if you have i think it is 15% down thye dont even have to look at your debt ratio, the only reason most places say that is because there is some provincial insurance thing that you must get approved for if you put less than 15% down

It's 25% not 15%. If you had 25% cash you wouldn't be having this conversation.

[sputnik]

Originally posted by t3rry


thats not true, if you have i think it is 15% down thye dont even have to look at your debt ratio, the only reason most places say that is because there is some provincial insurance thing that you must get approved for if you put less than 15% down

Not true... the 32/40 rule is a standard held by all lending institution regardless of how much money you have for a downpayment or how much money you make.

[t3rry]

sputnik, then tell me why my bank approved me and the cmhc denied me?

[ZorroAMG]

Originally posted by t3rry


thats not true, if you have i think it is 15% down thye dont even have to look at your debt ratio, the only reason most places say that is because there is some provincial insurance thing that you must get approved for if you put less than 15% down

That is 100% false. The only way a bank will disregard TDS ratios of over 40% is if you a) put 35% down and do an equity mortgage (usually reserved for self emlpoyed or new residents with good cash and income but no credit history)
b) you have good assets and the purchase is an investment and 25% down.

15% down will still result in CMHC or GE insurance premiums and the computer system there won't even allow an application through to an underwriter with anything more than 41.7%
Trust me.

PM me for more info, i may be able to help

[sputnik]

If you have 15% down (at least 20-30k) why not use that money to pay off your debt? or invest it in an RRSP and max out your tax return and use it to pay off your debt?

[G]

Originally posted by sputnik


Not true... the 32/40 rule is a standard held by all lending institution regardless of how much money you have for a downpayment or how much money you make.

That is true. When I applied for my mortgage they looked at all my credit cards, line of credits, etc. Even though I didn't have any balances on my cards having a potential to rack up 30K in debt on cards lowered the amount I could apply for. After I cancelled one of my gold cards I qualified for $275k.

[MerfBall]

assume a mortgage would be ur best bet. Alberta is the only province that will let u do it.

[E36M3]

Lending institutions definitely look at your debt ratio as a prime factor in your loan approval process. It doubt that it is the law, as it is just common sense for the bank to make sure that you have an ability to pay it off.

Having said that, a lot of banks will overlook high debt ratios if you have demonstrated an ability in the past to do ok with high debt ratios.

If I were you, I would go to a credit counselling service, get your debt restructured and consolidated (probably saving money in the process), wait a couple months, then apply for a loan. Depending on how much you put down, at some point you may be able to further consolidate your debt into your home loan, but that will most likely take some time.

BTW- Owning your own house is over-rated. It is expensive and a pain in the ass (probably a decent long term investment, but my other investments way outperform my house).

[sputnik]

Zorro is the "beyond mortgage pimp"... he preaches the truth

[t3rry]

well.. all this arguing isn't helping my situation any... anybody have the winning nubers to the super 7 next week? that would be helpful.

i dont even need to win the jackpot, $100,000 would be all i want, would pay my debt and give me a decent down payment for my house :D im not greedy :D

[t3rry]

Originally posted by E36M3


BTW- Owning your own house is over-rated. It is expensive and a pain in the ass (probably a decent long term investment, but my other investments way outperform my house).


not overrated for me :D i hate room mates and i hate paying other peoples mortgages, i want to have soemthign to show for my money and eventually have the opportunity to upgrade, as i see it it will be an investment, not an expense

[sputnik]

Originally posted by E36M3
my other investments way outperform my house.

unless you have a $200,000 margin account that is a pretty hard thing to do... % wise... you may do better... but my house went up 10% last year and that means a $20,000 return into equity

[t3rry]

i think my first hurdle is to get a better paying job, after that i think id be fine

[E36M3]

There are other ways to make money. I invest in a lot of early stage companies before they go public.

In any case, my house went up 20% in the last 18 months, so it was an incredible return, but past performance is never an accurate factor in determining future value, so my guess is that the housing market will be smashed when interest rates go up in the next 6-18 months.

There has been a huge artificial boom in housing caused by interest rates being at record lows, but it can't last forever.

There is a lot to factor into the cost of a house as an investment, especially maintenance and property taxes. With those factored in, the 10% rise in Calgary's real estate market (assuming that is where you live) is actually much lower.



Originally posted by sputnik


unless you have a $200,000 margin account that is a pretty hard thing to do... % wise... you may do better... but my house went up 10% last year and that means a $20,000 return into equity

[sputnik]

Originally posted by E36M3
I invest in a lot of early stage companies before they go public.


You clearly have quite a bit more money than what most of Beyond has to play with.

Based on that... a house is probably a good starting poing for the majority of us.

[G]

Originally posted by sputnik


unless you have a $200,000 margin account that is a pretty hard thing to do... % wise... you may do better... but my house went up 10% last year and that means a $20,000 return into equity

$20,000 return of equity is a false assumption. Remember that if you sell high you will have to buy high unless you sell and move back home you won't see the gain. My assessment went up from 261K in 2002 to 290K last year and I bought the house for 247k.

[t3rry]

Originally posted by ZorroAMG


That is 100% false. The only way a bank will disregard TDS ratios of over 40% is if you a) put 35% down and do an equity mortgage (usually reserved for self emlpoyed or new residents with good cash and income but no credit history)
b) you have good assets and the purchase is an investment and 25% down.

15% down will still result in CMHC or GE insurance premiums and the computer system there won't even allow an application through to an underwriter with anything more than 41.7%
Trust me.

PM me for more info, i may be able to help

i pm'd you..

[sputnik]

Originally posted by G


$20,000 return of equity is a false assumption. Remember that if you sell high you will have to buy high unless you sell and move back home you won't see the gain. My assessment went up from 261K in 2002 to 290K last year and I bought the house for 247k.

True enough. You gotta live somewhere. But an investment is still an investment and equity is still equity.

In the end I hope to own my own house so that when I am retired I can either sell it and put it into an annuity or at the very least not have to pay rent when im living off my savings.

You gotta think long term... i dont expect to pull $20k out of my house somehow and go buy a car.

[G]

Originally posted by sputnik


True enough. You gotta live somewhere. But an investment is still an investment and equity is still equity.

In the end I hope to own my own house so that when I am retired I can either sell it and put it into an annuity or at the very least not have to pay rent when im living off my savings.

My goals exactly. I have been looking at rental properties lately. Let other people pay off your mortgage.

[sputnik]

Originally posted by G


My goals exactly. I have been looking at rental properties lately. Let other people pay off your mortgage.

:werd:

I hope to have my house paid off in under 10 years... and hopefully then buy a house down the street (so i can easily keep an eye on it) to rent out.

Not only let other people pay my mortgage... but let them be the ones to save for my retirement.

[t3rry]

my uncle does that, he has 7 rentals properties in calgary

[E36M3]

I'm not saying that it is a bad start. If you are risk adverse, then real estate can be a good conservative investment. On the other hand, it can also be a terrible investment if you hit the market at the wrong time and have to sell while it is down (loss of job, other emergency).

As a start, I'd recommend getting 3 months of savings as an emergency fund, then separately building up the downpayment for a home. I'd also wait till you had enough money to get a home you'll be in for at least 10 years, as you'd be lucky to truly recover any real return in less than that (especially if you had to buy in the same market you sold in).

In any case, I didn't start off with lots of money to play with.. I own a house, so I obviously endorse it as an investment, but I am not sure it is as great as everyone thinks.

Remember, when you buy a house, you are getting a liability usually as large as the asset you are aquiring, so your not much better off unless it rises in value faster than you are putting money into it (and believe me, it adds up fast).

Another point for the new homebuyers.. shop around for mortgages.. I saved a ton of money by being very cautious about my mortgage.


Originally posted by sputnik


You clearly have quite a bit more money than what most of Beyond has to play with.

Based on that... a house is probably a good starting poing for the majority of us.

[t3rry]

well right now i am seeing my rent payment go to someone elses asset, and i dont like seeing that... it is a huge invetment because even if i dont get the full value out of it, atleats i get soemhting, with rent at the end i have Nuttin

[E36M3]

Maybe, but remember that a rent payment is usually a lot less than a mortgage payment ESPECIALLY when you factor in all the true expenses involved in addition to the mortgage permium, and the majority of your mortgage payment for a lot of years will go to interest. With the difference between your rent payment + a mortgage payment for the same place, you could be investing in something more profitable/flexible. Getting out of a house is a bit of a pain in the ass, although you acn do some creative refinancing to take out equity.


Originally posted by t3rry
well right now i am seeing my rent payment go to someone elses asset, and i dont like seeing that... it is a huge invetment because even if i dont get the full value out of it, atleats i get soemhting, with rent at the end i have Nuttin