Any help for first time buyers?

[chileanwinehous]

Im looking to buy my first home in 1-2 years. I have a learning disability that has held me back from going past high school. I have some trouble with grammar and spelling. My math skills are terrible and could be used against me when buying a home. This is actually my first time telling people I have this problem, I guess its easier to type it on a screen than to say it in person to a crowd. I have trouble staying focused and shy away from making conversation with people. Now I am going way off topic here Laughing out loud. I guess I would like to educate myself because I have a wife that I love and care for and a child on the way. I would like to have a small affordable home without the fancy bells and whistles that I have been seeing in newer condos/apt lately. Where can I look and who out there helps people like me that have trouble understanding mortgage rates, variable, non-variable.

27 year old male...

[Chuck Norris]

Let me be the first to say you're probably a lot smarter than many others out there. It takes big person to come out and say "I don't understand this." Too many people have pride issues and ironically, these people usually get taken advantage of all the time because they are too scared to appear inferior or uneducated.

There is a lot more to cover than a simple post could explain but I will try my best to explain some key elements to you.

The first thing is do not buy something that is beyond reach. Many brokers, bankers, and realtors, may qualify you to purchase a specific home but just because you qualify, does not mean it is wise to buy at the top of that range.

Lets say the bank qualifies you for a maximum of $500,000. You could borrow that amount but would you really want to be stuck with a huge mortgage knowing that most of the money you make each month will go towards paying off your home for 20-35 years?

You may be better off with a home for $300,000 and have extra money to save, go on a trip, treat your family to different things etc.

I wouldn't buy a newer place. The new condos in the lower mainland are of poor build quality and will likely not stand up too well. There are a few good newer buildings out there but they tend to be expensive such as The Kingswood or Grace.

You need to isolate the area you want to live in. Richmond, Vancouver, Maple Ridge, Surrey or wherever else. Once you know where, just look around at the prices on www.mls.ca and also check craigslist to see owners selling their homes directly.

Keep in mind prices are very high right now and are likely to be lower in 1-2 years time which is good for you.

You may want to consider a close friend or family member to help you with the negotiations as this is an important part of the bidding process once you find out the place you want to live.

As for the mortgage itself and how to structure it is difficult as I don't know you or your needs.

If you want, you can throw some numbers out there and I can see what makes sense. In 2 years interest rates will likely be higher meaning the cost to borrow will increase slightly. Once you're ready to buy the home or you're in the position where you will be making the deal, that's the time to look at the rates and whats available to you.

I personally think any mortgage that lasts longer than 25 years is bad for the average person unless they are financially savvy and have a solid game plan. If you cannot afford the mortgage on a 25 year term, you should not even consider buying something on a 30 or 35 year term. It is likely to create problems along with mountains of stress.

You can play around with some of the calculators such as:

https://www.rbcroyalbank.com/cgi-bin...much/afford.pl

Another one you can use to see your payments and how they are structured:

https://www.rbcroyalbank.com/cgi-bin.../mpc/start.cgi

Again, this is just the tip of the iceberg but talk to a close family friend, personal friend, or family member for advice. I hate to say it but people will take advantage of their own grandmother if they think they'd get an extra $5 out of you.

Protect your interests.

[ProShift]

There are also numerous government insentives that you can take advantage of.

I just pulled a bit of an article of my website.

First-Time Home Buyers’ (FTHB) Tax Credit
The costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes, can be a particular burden for first-time homebuyers who must pay these costs, as well as save money for a down payment. To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 — a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009. For more information click here.

Expansion of the Home Buyers’ Plan
The Home Buyer’s Plan now provides homebuyers with greater access to their RRSP savings to purchase or build a home. The Government of Canada has increased the Home Buyers’ Plan withdrawal limit to $25,000 from $20,000 per person for withdrawals made after January 27, 2009.

Zero Property Transfer Tax
In British Columbia the property transfer tax is 1% on the first $200,000 and 2% on the remainder. This is a significant transaction cost that you may be able to avoid entirely.

watch this video it is provided by CMHC (default insurer for lenders) but is fairly informative http://www.cmhc.ca/sharing/en/play.html?id=1

Feel free to PM or just post if you have any other questions

Happy House Hunting!

[SiR001]

http://www.realtylink.org/ is a good site and takes feeds from mls.ca

key things to remember when buying - location, location, location
- location for the following features - groceries, schools, amenities, transportation - you'll need to figure out the ranking of each of those
- location for resale later on....the above will be the features when you sell too...

good luck

[Gt-R R34]

Good posting! =)

Chuck and Pro really gave ammo for him to start looking. Good luck OP!

Chuck's best part imho - Work with people you trust.

[taylor192]

Originally Posted by Chuck Norris

Keep in mind prices are very high right now and are likely to be lower in 1-2 years time which is good for you.

I would wait till after the Olympics. I have an entire thread discussing the reasons why:
http://www.revscene.net/forums/mortg...y-t577273.html

Originally Posted by Chuck Norris

I personally think any mortgage that lasts longer than 25 years is bad for the average person unless they are financially savvy and have a solid game plan. If you cannot afford the mortgage on a 25 year term, you should not even consider buying something on a 30 or 35 year term. It is likely to create problems along with mountains of stress.

The OP is 27 and will think that a 35yr term is understandable cause it will be paid off before he retires. I agree with Chuck Norris that 35yr terms are too long, if you need to take one to afford a house, you're stretching yourself.

Lets assume house prices stay flat for 5 years, zero increases:

In the first few years of home ownership with a 35yr mortgage at today's rates you will pay down 7% equity on the house in the first 5 yrs. If you leave < 20% down you'll pay a fee to CMHC of 1-2%. Take your 7% and subtract 2% and you're left with only 5% paid down on your mortgage.

Not exactly a good place to be in. Now with a 25yr mortgage you will pay down 13%, subtract 2% and you've got 11% equity. It doesn't seem like a lot, yet on a $300K condo that's a difference of $18K.

[Gt-R R34]

30/35 year mortgage doesn't need CMHC - especially his first purchase. Anything below 20% Down = CMHC or GE, only 2 companies in Canada allowed to do High Ratios.

[johny]

although I agree that if you can't pay it in 25 years you are buying more then you should, the one advanage that I could see of a 35 year is that you can get one, and pay an extra few hundred a month to make up the difference. after 25 years it'll still be paid off and the total interest should be simular. but if you get lay off or something happens you can resort back to the lower 35 year payments for a couple months untill you are 100% back on your feet.