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Buying first house

raingirl
May 25th, 2005, 10:02 AM
Anyone know where we should start if we want to consider buying our first house?? Anyone bought a house with little or no downpayment like they are offering now? We are thinking of buying something small like a condo or townhouse, nothing big, but something that our payments would be approx the same as we are paying for rent now ($1000 a month). Is that possible?? I know nothing about buying a house.

Princesss04
May 25th, 2005, 10:12 AM
You are paying $1000 a month for rent! HOLY COW! I guess that is Canada money but still that is alot. We are looking to buy our first house as well! :D

happycats
May 25th, 2005, 10:13 AM
Here are some helpfull sites.
http://www.jemmortgage.com/calculators.htm?OVRAW=mortgage%20calculator%20cana da&OVKEY=mortgage%20calculator%20canada&OVMTC=standard
http://www.mortgagecalculatorcanada.com/

And I would suggest getting a mortgage broker (they are free) that way you will get the best mortgage rate possible.

Eleni
May 25th, 2005, 10:14 AM
and I thought paying 753$ for a 3 bedroom apartment was too much,

you would be better off buying a house at that price, at least all that money would eventually pay the hosue off

however ive never bought a home so i unfortunatly cant give you any tips.


Eleni

SarahLynn123
May 25th, 2005, 10:18 AM
I just bought my first house about a year ago. I started at a morgage broker, she was great. They figure out what you qualify for and find the lowest rate for you. Next step for me, once I was preapproved, was a realestate agent and the house hunting began! (I know I have terrible spelling)

You should move to Calgary, then I can just set you up with the people I used!!!!!

This is going to kill you, but I have a 3 bedroom house with a fenced back yard and I pay $736 a month for morgage. I cant believe what you are paying in rent!

happycats
May 25th, 2005, 10:20 AM
IThis is going to kill you, but I have a 3 bedroom house with a fenced back yard and I pay $736 a month for morgage. I cant believe what you are paying in rent!

Calgary here I come !! :eek: What a great price, do you mind me asking how much your property taxes are ?

SarahLynn123
May 25th, 2005, 10:22 AM
Calgary here I come !! :eek: What a great price, do you mind me asking how much your property taxes are ?

Not at all, I pay $103 a month!

happycats
May 25th, 2005, 10:23 AM
Not at all, I pay $103 a year!

:eek: :eek: :eek: OMG $103 !!!!! :eek: :eek: ONTARIO SUCKS!!!!!
I pay $2800.00 a year !!

SarahLynn123
May 25th, 2005, 10:25 AM
:eek: :eek: :eek: OMG $103 !!!!! :eek: :eek: ONTARIO SUCKS!!!!!
I pay $2800.00 a year !!

oops I edited it, its $103 a month!!

happycats
May 25th, 2005, 10:27 AM
Also something to consider, I was told that you have to be employed at the same job for at least 1 year to even have your income considered. (my hubby had started a job 5 months before, so they refused to even consider his income, so we had to get a smaller house)

nymph
May 25th, 2005, 10:34 AM
Your rent is not your monthly mortgage payment, it is the sum of
-monthly mortgage payment
-property tax
-condo fee if it's a condo
-property insurance
-all utilities
-repairs/renovations
-landscaping (you can save a bunch here :D)
...

I too used a mortgage broker, it turned out to be a good idea.

kandy
May 25th, 2005, 10:40 AM
My son just bought a home, and used a mortage broker. He also qualified for a program just for first time home buyers where he didn't have to have a down payment - he just had to pay all the closing costs. I don't know if they have a similiar program in Canada, but you could ask. I did read on MSN that (at least in the US) mortage brokers and banks are qualifying people for much more house than they can actually afford. The article said that you should only use 1/4 of your income to pay for a house, but that banks and such are willing to commit almost 50% of your income when qualifying you for a loan. That's pretty much what they did with my son - he brings home about $2500 a month (US) and his house payment (including taxes & insurance) are $1150 a month. The mortage broker told him that he would prequalify for up to $250,000 worth of house. The house he bought was $160,000 and I would've hated to see what his payments would've been if he'd bought a $250,000 home! :eek:

raingirl
May 25th, 2005, 10:48 AM
Thanks for all the info guys.

We actually pay $941 for rent, and $30 for parking each month. All utilities are included. This is actually cheap for where I live. If I were to move any closer to Toronto, it would double or triple! we have a 2 bedroom here. In toronto, one bedroom or bachelors go for up to $3000!! I know someone who rents a 1 bedroom beside the skydome, and pays $2500 a month!

I did a few of those online mortgage calculators, and I'm getting between 150,000 and 160,000 for a pre-approval, using both my BF and my income together. unfortunately, that is not enought to buy a house around here at all. I would be lucky to get a one bedroom condo for that amount! there are a few nice condo townhouses for about 160,000...but as soon as we add on the codo fee of $400 per month, it gets out of our price range.

Plus...neither of us have been at our jobs for a full year yet. That won't be until next february (not that we were planning on buying before then for sure).

Will we ever be able to buy a house? I'm 27 this year, and he is 35...we want to get married and have kids, but not in an apartment!
I also didn't know what to estimate for property taxes or heating costs in the calculators, or what interest rate to put in.

CyberKitten
May 25th, 2005, 10:55 AM
For a house, that is not actually that bad. My sister had to rent a home for my nephew who was doing an internship at university in Vermont
Cost - $4,000 a month!! So in addition to his $28,000 a yr tuition plus all the other expenses, that meant 16,000 for a home. It was a beautiful home - I went to visit while visiting her for the w/e but I surely could not have afforded that in university!!

Princesss04
May 25th, 2005, 11:15 AM
WOW I looked at some realstate over in Ontario, Can and even the run down houses are over 100,000 it seems like. Wow that is alot of money for some of those houses. You can get expensive houses over here but you can also get some resonable houses as well. I was hoping to keep my house payments to about $600 a month. I will not be moving to Canada anytime soon. It would be alot harder over there to buy your first home. :D

Lizzie
May 25th, 2005, 11:31 AM
I would suggest going to your bank first. They will be able to help assess when and how you can afford a mortgage. Keep in mind that a mortgage broker as opposed to a bank will charge you brokerage fees. A bank wont as they will only sell you their own. That being said, they are typically all one in the same...they all want your dollars and will lower their rates for you if they feel you might go somewhere else. Also, try to force the fact that you are young and have a lot of business to bring the bank...that gets them going too.

After finding out what you can afford I would start looking for quality, saleable places. You won't want to buy something that has a low resale value as you are young and may want to upgrade to a large place in a short time. You will also want to consider the proximity to schools, buses, grocery stores etc. If you want kids soon....you'll likely want to find out how child friendly and safe it is.

I would avoid getting yourself your own rental agent if you can as they will charge you anywhere from 4-8 per cent for their commission fee. If you buy from someone who has an agent then only the seller pays. Your lawyer will take care of your own paperwork.

raingirl
May 25th, 2005, 11:41 AM
My step father's brother is a retail agent, so we were going to go with him if he provided a discount to us, otherwise we would do it on our own. that's good advice lizzie.

So, basically find out how much a bank or mortgage broker will give me/us, then start looking for places? Is that how it works?

Also, can you go to your bank AND a mortgage broker?? I know the mortgage broker will charge fees if you take a mortgage with them, so can I get pre-approved with them, and then go to my bank and say "hey, this is what they are willing to give me, can you do better?"

Something that unfortunately limits the places I can look at is that because I am allergic to cats, I can't buy a place that has had any living there in the last 6 months to a year. It takes that long for the dander to lose its effect. Most of the places I have seen have cats in their pictures which sucks.

Also, anyone ever bought a house that has a rental unit? We were considering that as well, as my parents are landlords, and my stepdad's brother is familiar with finding units that have rentals in them (like basement apartments). I have no probs being a landlord. Most times you can find places where there are already good tenents, and the tenents will stay, and you just take over the rental payments from them...

heeler's rock!
May 25th, 2005, 11:55 AM
We had some issues when buying our house. We went to the bank, and they wouldn't approve us because I hadn't been at my job long enough and hubby's credit was too new. So, we contacted a broker and he found a mortgage company that would take us, and we went that route. We didn't pay him any fees because the company providing us with the mortgage paid him as he got them some new clients. Also, when a broker finds you a mortgage, they don't just use banks, they use financial firms, private companies, and all sorts of lenders. They all compete for your money, so you get a good rate. Sometimes you will get a great rate through the bank, and as far as I know, the mortgage lender pays the broker, not you. Also, if you go to a bank and a broker, you're getting multiple inquiries into your credit report which can be damaging if you're not approved by one. A broker only does one inquiry and that's it.

raingirl
May 25th, 2005, 12:00 PM
Thats try heelers, I thought maybe that is how they work, but wasn't sure. Maybe some mortgage brokers are different.

They are sorta like the companies we dealt with in insurance in setting up structured settlements...the company would find the place to take the money and manage it, and the place would pay them..not us.

Here is a place that I really like. I know some people who live in the same townhouse complex:

http://www.mls.ca/PropertyDetails.aspx?vd=&SearchURL=%3fMode%3d0%26Page%3d1%26vs%3d1%26rlt%3d %26cp%3d%26pt%3d1%252c57%252c69%252c88%252c148%26m p%3d0-200000-0%26mrt%3d-1-0-0%26Beds%3d0-0%26Baths%3d0-0%26f%3d2%26ft%3dall%26o%3dA%26of%3d1%26ps%3d50%26 ptgid%3d1%26aid%3d3471%26MapURL%3d%253fAreaID%253d 3469&Mode=0&PropertyID=3249269

I hear you can get mortgage interest rates as low as 2.5% now...is that right? According the the mortgage calculator, I could buy the above place with a monthly payment of just under $800...which would be amazing! That way I have money left over for property tax and heating/cooling which will be expensive.

Beaglemom
May 25th, 2005, 12:10 PM
About condos, be careful as to which ones you look at. My husband owned a condo and after a while hated it! There are a lot of rules that you have to abide by. Some will even dictate which colour your window coverings should be facing the outside. Also, many don't allow dogs but will allow cats. We ended up selling his condo and buying a house. Now we determine our own rules and can have any pet we want, within reason of course. :)

With some townhouses and with all condos you have to pay monthly maintance fees above and beyond your mortgage payments. With a condo you don't pay utilities because it is part of your monthly maintenance fees, but you do pay utilities with a townhouse.

raingirl
May 25th, 2005, 12:27 PM
Thanks Beaglemom. That does clarify a little.

Unfortunately, it's the condo townhouses that are the cheapest and the only ones we could afford. The same townhouse that is not a condo is almost $100,000 more (doesn't make sense to me..but that's how it is).

I have seen some condo townhouses that the condo fees are under $200...

I don't really want to buy a condo, but they are so much cheaper!

Beaglemom
May 25th, 2005, 12:40 PM
This can be a great way to get into home ownership. Once you build equity, you can always move up. I thought that I would just mention the rules and fees.

When my husband and I thought about buying our first home together, we looked into buying a townhouse as well. I don't understand why some of them are priced so high! His condo unit was too small for the two of us and besides, they didn't allow dogs! I can't live with those kind of rules! No dogs, I'm out!

Buying your first home can be a fun and wonderful experience. Good luck.

jackieb
May 25th, 2005, 12:54 PM
im lucky here but my friend pays 1600 a month rent. We are just buying our first house the morgage is more than our rent plus property taxes.

You can get insurance from ge or cmhc the less you have the more premium you pay. You can get 100% morgages but there are strict criteria. Our morgage broker has been really good very efficent and got us really good rates alot better than our bank offered

jackieb
May 25th, 2005, 12:56 PM
im not sure about 2.5 its probably a variable discounted rate for 3 months im getting a open rate morgage for 3.5% apr

Just to add the Variable rate is the cheaper and normally you can swap to a fixed if you want. |We are going with Variable purely for cost!

raingirl
May 25th, 2005, 01:00 PM
I only have about $3000 to put down...not much, but it is something. If we can't get a mortgage now because we are new in our jobs, then we will be able to save a little more before we buy.

Prin
May 25th, 2005, 01:48 PM
If you put nothing down, you pay a lump sum that is something like 5% of the houses' value-- it's added to your mortgage. With 5% downpayment, it's reduced. It's sort of an insurance. The kicker is, if you pay 25% or more in downpayment, the bank is responsible for the loan and they will send an inspector out to evaluate your home before the mortgage is approved. If you pay less than 25%, the mortgage insurance you pay extra for is responsible for insuring the loan, and no inspector is sent out. So you have more chance of getting a lower budget home approved if you have less of a downpayment.

Our new mortgage will be $550 a month and the taxes are $86 a month. Not too shabby, but then it took us a year to find a house so cheap in pretty good condition.

It's way possible to do it for under a $1000.

The total of the housing costs and your existing debts can't be more than 40% of your gross annual income. So cancel your credit cards if you think money will be tight. Even if you have no outstanding balance, they consider credit cards as liquid money you can access anytime, and add the credit limits to your debt load.

Last thing, get a realestate agent working for you. If the housing market is high in your area, by the time they are on Mls, they will be sold. Realestate agents working for the buyer get paid by the seller (in most cases, check to be sure), and they get the listings a couple days before the public has access to them.

Good luck. (I hope that helps something)
The Royal bank has a ton of tools about mortgages on their website, too. You don't have to be a client to access them. :)

raingirl
May 25th, 2005, 01:55 PM
Thanks guys for all the advice! THis is great!

Ok...so, total housing costs plus debt can't be more than 40% of our income... we are screwed then. at least 60% of our income goes to housing and debt. The rest goes to food and other bills like car and phone/internet/cable. Right now our rent alone is 30% of our income approx, and another 30% goes to debts at least.

I know idealy it's supposed to be no more than 1/3 of your income, but realistically in southern ontario, that's impossible. Especially since we are both in huge debt from school (combined we have over $75,000 in debt from school) which usually means payments of about $800 a month between us..

Now it is looking a little hopeless.

Bearsmom
May 25th, 2005, 02:05 PM
If it's Brampton you're looking at, it's grossly overpriced. Have you thought of Orangeville? You can get a 3 br 2 bath condo townhouse here for $119 000. Houses are still pretty cheap, too, and it's only 25 minutes north of Brampton, full GO service, etc etc.

Jackie467
May 25th, 2005, 02:05 PM
Thats all you people pay. Tomas and I are looking at getting our own apartment and for a 2 bedroom it's at least 1,000 a month, and that is for the not so great ones! I think I'm going to move up there with you.

Princesss04
May 25th, 2005, 02:07 PM
How is your new job coming Raingirl?

It does soudn impossible doesn't it I know we are looking into it as well. We are not sure if we want to stay where we are at or buy a house or what. We keep looking and talking. :D

raingirl
May 25th, 2005, 02:16 PM
Bearsmom, I search all of orangeville on MLS and I saw some nice places, but I'm not sure if it would be logical to move that far north for us, being that we both work in the GTA. There are no GO trains up there right? I know there is a bus that goes from Brampton station up that way though. Because of what my BF does, it would be hard for him to find a job outside of a big city (he is a graphic designer).

Princess, my new job is going fine. At least I am being paid now!

Prin
May 25th, 2005, 02:17 PM
They do take into consideration the amount of rent you are paying now too. If I was you, I'd make an appointment with a banker to see what the picture is. Just don't finalize it. Don't get preapproved. You have to shop banks first and every preapproval supposedly damages your credit. They just don't take you seriously if you have like 5 preapprovals pending...

Just sit with a banker, go over your debt load and credit cards and expenses and s/he'll tell you what your max house amount would be. Then you decide if it's possible or not. :)

Writing4Fun
May 25th, 2005, 02:20 PM
Yeah, rent in the GTA is a little pricey compared to the rest of the country, even compared to the rest of Ontario. I agree with Bearsmom - look outside of the GTA. You'll pay way less and probably get much larger lots for the puppy. We're on a 1/2 acre lot because of the septic system.

Have you been on www.mls.ca? That's where we went when we were looking for a house. There's actually a house for sale down the road from us. It's the same model as our house. Across the street from a park, walking distance to shopping, Tim Horton's, Go bus service (the train is coming in soon), public school (the Catholic school is a bus ride, and I think the bus stop is right across the road from that house), walk-in clinic where the doctor is still taking new patients (very important to look into these days! :thumbs up ), etc... Let me know if you want to see it. I'll PM you with the link to the mls listing. :D

(ETA) Oops! :o Sorry, posted at the same time and didn't see that you're already on mls. But, yeah, check out the areas outside the GTA. There is Go service to these areas, and lots of people make the trek to town, so you could probably find people to car pool with (a really good real estate agent will be able to find this information for you - ours did!).

Britishvixen21
May 25th, 2005, 02:25 PM
$3000 for a two bedroom in Toronto?? Where do these people live? I have a batchelor on the cusp of rosedale and I pay $700 all in, and I know the one beds in our building are $850 and they are huge! You can get a condo in Toronto for $160,000 have you thought about a town house there a little cheaper and I know that they are building them on king street right now and they are fairly reasonable and have good move in incentives.
My inlaws are from just outside Orangeville and in my opinion (and sorry for anyone that lives there) but its the armpit of ontario and my hb says that and he grew up there. plus its a bitch of a drive everymorning. where in Ontario are you now if you dont mind me asking? and where are you willing to go?

raingirl
May 25th, 2005, 02:26 PM
Wow. I just looked up one of the addresses in downtown Orangeville. Thats so far from Brampton, let alone the Go line and Toronto. It's an additional 45 minutes each way!

I know it sucks living in the GTA, but that's where the jobs are unfortunately. I have never had a job that wasn't in Toronto ever...I can't find any!

I am in Brampton Britishvixon. I have seen what is available in Toronto, but I would be able to get more for my money here in Brampton. We have new townhouse condos here for $160,000, 3 bedroom. I would be lucky to get i bdrm plus den for that amount in a condo in Toronto.

Britishvixen21
May 25th, 2005, 02:35 PM
Trust me if you are a GTA'er you are never going to want to live in Orangeville, the journey is hell, its very clicky up there as they still have the small town mentality and trust me youl miss the city! and living in the GTA doesnt suck, sure its pricey but what an amazing city its value for money in my eyes. Cant you look for maybe a repo, or one that needs a bit of work, are you and your hubby handy with a hammer and saw? sometimes we need to think outside of the box.

raingirl
May 25th, 2005, 02:48 PM
Actually, Brampton is very much an old town/small town mentality, especially where i live now in downtown brampton.

I like Toronto, I have lived there, as well as Scarborough, Mississauga and Pickering. I love Brampton the best. I also find it is easier to get to downtown from Brampton than the rest.

I looked at all the properties under $200,000 and none are really a "fixer upper"....Maybe it's not a good time to look.

nymph
May 25th, 2005, 03:00 PM
Mortgage broker will charge you fees if you DON'T end up using them, otherwise the bank pays them, so there shouldn't be any extra cost to you.

Here are the steps we took to purchase our first home:
-get a mortgage broker
-get a mortgage pre-approval, note the rate AND term, you can get multiple pre-approvals from multiple banks if you want to. INGDirect generally has the best posted rate, you can use it as your benchmark.
-get a real-estate agent
-search in www.mls.ca for local listings and visit new construction model homes
-ASK AROUND, people love to talk about houses I've learned and you'll get some most valuable information from just talking with other people, and
-DO YOUR RESEARCH on location location location.

For first time buyers, you can use up to 40,000 combined RRSP (20,000 each) towards the purchase of your first home. If you can't put down 25% downpayment, the bank usually will ask you to buy mortgage insurance, which is a sliding scale according to the amount of mortgage outstanding, more info on www.CMHC.ca, you may also qualify for a reduction in mortgage insurance premium.

Britishvixen21
May 25th, 2005, 03:04 PM
I dont know if this makes you feel any better, but back home in England, you wont get a 1 bed flat in like ghetto dont walk on the streets after 7pm, always carry a gun with you ghetto area for less than $200,000 CDN, my freinds house that was in the middle of a co op housing estate that had something like a 70% crime rate was just over $200,000CDN and that was a fixer upper and was about 30 miles outside of London.
But good luck the right house might take a while to find but it will be worth the wait. as the old saying goes good things come to those who wait :D

raingirl
May 25th, 2005, 03:09 PM
There is no way I would be able to save up $20,000!! It took me two years just to save $3000 in my RRSP. And my BF doesn't have any RRSP. So...$3000 is all we got. I knew the lower the downpayment, the more we would pay for mortgage insurance.

Gosh...I feel so helpless...being a 20-something sucks these days. You are basically forced to go to university to get ANY type of job (gosh, even retail stores are looking for college or University!)...then you end up in huge debt because people our age are children of the 80s when there was a recession, and our parents didn't save for our education, then the cost of living is so high, you can't save any money and you barely make it pay cheque to pay cheque! The reason people are waiting so long to have kids is because it's so hard to start out your life these days! Grr...

Lizzie
May 25th, 2005, 03:17 PM
Honestly, if you have $75,000 in combined debt I would focus on paying that down to a reasonable level first. I know that a lot of people wouldn't agree with me, but I would rather live comfortably in a rental apartment while paying down that enormous load than sinking myself into another load of debt.

If I were you I would seek the advice of a financial service rep at a bank. Talk to them first about paying down your debt. Don't even bother jumping on the mortgage bandwagon until you discuss what to do with your debt---they will want to sell you more before you even blink.

In the meantime, if you want to save more money to pay down your debt you could consider moving to a one bedroom apartment with lower rent. While it's not ideal necessarily, it could be seen as a cushion to get your debt down sooner so that you can afford to buy a place.

raingirl
May 25th, 2005, 03:29 PM
Yeah. I considered that. Right now my loans aren't with the bank, they are with the government (OSAP loans)..so the bank can't really help. COnsolidating them wouldn't be good, as the government loans have a lower interest rate. Right now I am paying double what the minimum payment is, but I still have another...5-9 years before they will be paid off completely. I have reduced them by at least $10,000 in the last 4 years, I still have another $25,000 to go (I paid off a lot while living with my parents).

My BF has more than me though since he just graduated, and his are with a bank or on credit cards, which is worse. He really needs to consolidate all his debt I think...but he doesn't care what I think....(why are men so stubborn sometimes?)

jackieb
May 25th, 2005, 03:32 PM
I dont know if this makes you feel any better, but back home in England, you wont get a 1 bed flat in like ghetto dont walk on the streets after 7pm, always carry a gun with you ghetto area for less than $200,000 CDN, my freinds house that was in the middle of a co op housing estate that had something like a 70% crime rate was just over $200,000CDN and that was a fixer upper and was about 30 miles outside of London.
But good luck the right house might take a while to find but it will be worth the wait. as the old saying goes good things come to those who wait :D


House prices in the uk are crazy!!!!!

you can get a 100% morgage but you have to have been in the same job for a year there are a few other stipulations

Schwinn
May 25th, 2005, 03:50 PM
I'm living 15 mins north of Newmarket, and I work in a building right beside the Eaton's Centre downtown. The commute sucks, but our house would probably be easily another $150 000 in Toronto, with a smaller lot. Also, if you buy in Toronto, you won't make any money if you sell in the next few years. Condo prices are going to fall quickly within the next year. Outside of the GTA, depends where you go. We moved from Wasaga Beach to our current house, and we paid about $50 000 more for the same size. And we just had our house appraised for an additional $40 000 (we've been here a year and a half). Even moving our house 15 mins south would add another $50-100 000.

Now, as for mortgages (blows off old banker's hat), as someone who used to work for Royal Bank and Laurentian Bank, I can give a little advice from that side of the table. When you are pre-approved, not all banks do a credit check. They will give you the pre-approval based on "satisfactory credit and income confirmation". Also, they will want at least one of you to have at least two years of employment history with your current employer. That being said, if you are in the same occupation but different employer, they will usually be a little more leniant. Also, they are going to take your fixed bills (loans payments, lease payments, 5% of credit card limits) and divide it by your income. This number must come out to 40%. They don't care about phone bills or anything that isn't a set amount. Just because you come in at 39.9%, however, does not mean you should do it. Two things. First, how much do you guys spend on entertainment? I've seen people who spend all thier free time sitting at home watching TV, who would be safe with a debt servicing of 50% because they don't really need much disposable income. I've also seen people who would have an issue at 30% because they spend all thier time going to shows and eating at fancy restaurants. Second, take a look at your mortgage payment, especially now, and had a couple of percent. Mortgage rates WILL go up at some point. There is a prediction that the housing market is going to take a huge drop in price just from people who got mortgages at low interest rates trying to dump the houses when their term expires because they can't afford the new rates. Find out what the mortgage payment would be at a rate of 7%. I talked a couple of clients out of buying houses because a greedy mortgage rep gave them the biggest mortgage possible (ergo, the biggest commision for her). We calculated that if rates went up a half percent, they wouldn't be able to afford living there. Also, look at mortgage insurance. A lot of insurance people tell you this is a rip off, because your payment stays the same while your balance drops. What they don't tell you is that if you have a $200 000.00 mortgage, your insurance premium is actually based on $100 000.00. So for the first half of your mortgage, you're getting a great deal. The second half, the bank hopes like heck you keep it, because that is where it evens out. I'm telling you this because of your age. It will be extremely cheap for you, and it will not change with your age as long as you have your mortgage.

As for no money down mortgages, I don't know a lot about them. Only one bank offered it when I got out of the game. Now, I think they all offer it, and my wife, who is a bank manager at Royal, isn't a big fan. Something to do with costs, but I don't remember what exactly. I'll try to get clarification.

If you are going to be doing it at least a year from now, look at putting money in your RRSP. You can take out 30% without penalty, as long as neither of you has owned a home 5 years previous. Some people say don't touch your RRSP, which is partly true. I always advise people who have contribution room they wouldn't otherwise be using, to put any downpayment in there. Several reasons. First of all, you are going to get a tax refund. Use that to top up your down payment. Secondly, you'll be less likely to dip into your fund. You do have to pay it back, but over fifteen years, after a two year grace period. Now you're guaranteed to make a contribution to your RSP. And if you take out the full $20 000 allowed per person, it comes out to under $112/month you have to pay back. It's a great way to increase your down payment through little effort.

Brokers--most don't charge a fee, they receive it through the institution they place you with. You do have to be careful, however, as some will "fudge" some numbers to get you the mortgage. They may seem like they are doing you a favour, but the bank could find out and say that they are pulling thier mortgage, meaning you now owe the full balance all at once. I'm actually watching that happen right now with someone.

That's all I can think of right now. (Takes off banker hat and throws it in the corner in disgust...)

Schwinn
May 25th, 2005, 04:07 PM
Yeah. I considered that. Right now my loans aren't with the bank, they are with the government (OSAP loans)..so the bank can't really help. COnsolidating them wouldn't be good, as the government loans have a lower interest rate. Right now I am paying double what the minimum payment is, but I still have another...5-9 years before they will be paid off completely. I have reduced them by at least $10,000 in the last 4 years, I still have another $25,000 to go (I paid off a lot while living with my parents).

My BF has more than me though since he just graduated, and his are with a bank or on credit cards, which is worse. He really needs to consolidate all his debt I think...but he doesn't care what I think....(why are men so stubborn sometimes?)

Sorry to post again after a long winded post, but there were a few posts that went up while I was posting (and the record for using the word post the most often in a, uh, post goes to...)

DON'T consolidate your student loans. Two reasons. 1)You will have a higher monthly commitment as they will be amortized over 5 years (and you can always pay extra on them anyway without penalty) and 2)the interest you're paying is tax deductible. You could actually take that refund, and put it down on your student loans!

raingirl
May 25th, 2005, 04:17 PM
Schwinn...that's exactly I was told. Don't consolidate. I pay to my loans whenever I have extra money. I also add to my RRSP whenever I have extra money, plus the $50 a month regular I put in.

We are home bodies. We hardly ever go out. We see a movie once every two months. we order out twice a month..but that's about it. We just go see family mostly. We probably spend more now because of the dog, because we buy him things...

I still don't think we would get anywhere near the 40% cut off though because of our student loans. I think my BF pays more to his loans (credit card and bank line of credit) per month than his half of the rent.

I think I will just continue saving all my extra $$$ to my RRSP for now and we will start looking. We also need to save up some $$$ for all the closing expenses (can be a large amount I'm told...you can't use the mortgage for that though right?)

Schwinn
May 25th, 2005, 04:33 PM
We also need to save up some $$$ for all the closing expenses (can be a large amount I'm told...you can't use the mortgage for that though right?)

No, you're expected to pay that out of pocket (unless things have changed, which I don't think they have, but they might). Now, that being said, you can always find someone with "creative accounting" skills to get it done. But again, if CMHC finds out, it can cause SERIOUS trouble for you.

Also, one more thing I meant to mention (sorry, I know I'm going on). When it comes to rentals, the banks won't use the income to determine eligibility UNLESS you have a signed lease and a guaranteed tennat (which usually means they've been there for some time) AND you have a banker who will actually go to bat for you. Some say no, some say maybe. I've gotten a few things done that other bankers were either surprised I got through, or surprised I put the effort in. I never gave a mortgage or loan to someone who didn't qualify right away that I questioned, I always made sure I felt it was right for them, but there is sometimes some "wiggle-room".

I forget how they used to tell us to figure closing costs. You have your lawyer's fee (which I think they said was usually up to 5% of the purchase price, though that was a rough guideline), land transfer tax, and sometimes other expenses. Oh, and don't forget the other stuff you've never had before...garden hose, lawn mower, etc.

jackieb
May 25th, 2005, 06:51 PM
my lawyer advised me of his costs before we went with him most people advise 1.5% to 2%

jackieb
May 25th, 2005, 06:52 PM
our morgage broker is deferring our cost for 6 months no intrest and we are getting insurance to the insurance recommend 1.5% for all costs

Also i was advised you can add the land transfer costs to your morgage if you want

lilith_rizel
May 25th, 2005, 08:53 PM
Princess you think that is alot! James and I had to pay $1200 for a apartment that was built over 80 years ago, had mold, lead paint, carcked walls and ceilings, and appliances that didn't work! That was our old place though. Now we pay $1400 for a place built in '95, everything works, full garage, screened in porch, and 2 living rooms. They are more like houses, but there are 4 per a complex. The thing that sucks is as James gains rank, the more we have to pay for this place..... I know it doesn't make sense does it....

Lizzie
May 25th, 2005, 09:17 PM
If your BF has racked up his credit cards with student debt you should REALLY encourage him to get a line of credit at the bank...or get a bigger one to pay them off if he already has one.

The interest rates on credit cards are phenomenal....LOC's are much more reasonable--averaging anywhere from prime to about 10 per cent. Credit cards on average are around 18.5 to 19.5 per cent.

It'll be an easy way to save money. Cut up the credit cards, pay off their tab with a LOC and start paying down the debt. The money he pays in interest alone could help you save for your new home!!!

If your debt is solely with the government, I'd just double check the rate you are paying. Last year when I had to negotiate mine they rate they offered was something like 12 percent. The extra money I had to pay them in interest equaled out with the money I saved on taxes so I took my loan to a bank. It was much easier to pay down, and a lower interest rate. Sure, no tax break..but like I said, the extra interest negated that part! You may just want to double check to find out what you are paying now on interest to compare.

Joey.E.CockersMommy
May 25th, 2005, 09:58 PM
We have a three bedroom house with a fenced yard in a middle to upper class neighbourhood. We got it at a steal at 160 6 years ago and its probably worth about 250 now. Its a pretty basic house. We pay about 800 month for mortgage payment. Our taxes for the year were 1700. One thing to be careful when getting your first house if someone hasn't mentioned this already the conveyencing fees can be kind of high 1000 dollars or so. Also be sure to get an inspection done on any home you are considering.

wjranch
May 25th, 2005, 10:25 PM
Hi Raingirl,
I am a real estate agent in an area not too far from you. I may be able to answer some of your Q's regarding first time purchases. There has been some good info given to you, although quite a bit of it is not relative to our area. Such as the associated costs over the long term of purchasing with a small or no downpayment...
PM me if you are interested in chatting about this more, I'd love to help you out with getting a start in the 'home ownership' field...and in such a crazy market (like we have going on in our area now) it can be tough and scarey to get the best possible deal for you.
:D

Prin
May 25th, 2005, 10:32 PM
Hey, Schwinn, when you're not joking you're just fulla information! I think that was really useful. We just bought a house in Feb (move in June) and there is SO much info. So much. The second should be sooo much easier.

In Ontario do they have the "RAP"? I don't know if that's a French acronym, but here, 60 days before you go to the notary, you can take out a loan and buy RRSP's with it. Thirty days after notarizing, you sell the RRSP's to pay off the loan, and then reap the tax break in the spring. You have 15 years to repay the RRSPs, but the timeline I mentioned is very rigid.

Move to Quebec... It's cheaper than Ontario. :)

Bearsmom
May 26th, 2005, 04:40 AM
My inlaws are from just outside Orangeville and in my opinion (and sorry for anyone that lives there) but its the armpit of ontario and my hb says that and he grew up there. plus its a bitch of a drive everymorning. where in Ontario are you now if you dont mind me asking? and where are you willing to go?

My point was, without getting into SLAMMING where people live, is that our house in Orangeville (3000 square feet), would have cost us $400K in Brampton/Toronto/GTA.

WE love living here, yeah, there's a lot of old money here, but the people are way friendlier here and you're not getting your ass shot at on a regular basis like in Toronto. PLUS I'm not afraid to raise my child here.

Bearsmom
May 26th, 2005, 04:44 AM
Trust me if you are a GTA'er you are never going to want to live in Orangeville, the journey is hell, its very clicky up there as they still have the small town mentality and trust me youl miss the city!

Wow, tell us what you REALLY think of Orangeville.

Anyways, raingirl, good luck. Orangeville was a suggestion because you really can save a lot of $ if you're willing to look outside of major cities. We saved a LOT of money for twice the size of house.

Sounds like there's some great advice on here. Best of luck, going to stop typing before I get more pissed off at some of the rude comments.

happycats
May 26th, 2005, 06:24 AM
Anyways, raingirl, good luck. Orangeville was a suggestion because you really can save a lot of $ if you're willing to look outside of major cities. We saved a LOT of money for twice the size of house.



Don't worry Bearsmom, I hear Orangeville is beautiful ;) I have relatives there, who just LOVE it :)

I live in Oshawa, and never stop hearing about what a horrible, awful place it is!! (So I know how you feel) But in Oshawa you can get a HUGE house with lots of property, for about a quarter of the price of Toronto!! ;) My friend just bought a large 4 bedroom fully detatched brick house, with a hugh lot that has a ravine running through it for just $240,000.00.

Britishvixen21
May 26th, 2005, 08:53 AM
Firstly apologies to bearsmom did not mean to offend, second of all was only stating my opinion in that if you have lived in a big city like toronto orangeville can seem a little clicky. As for what I said maybe I should be a little more specific, My in laws are from Dundalk near orangeville.I find the People are clicky and rude i.e. As soon as we arrive people look at me funny because (a) they dont know who i am (b) I talk kinda funny with my accent. its like the typical country and western films where the lone ranger walks into the bar and the music stops and the bar man puts away the bottle of drink LOL. Second of all you cannot disagree with me that the commute from orangeville would be a hell of a journey everyday, especially via public transport not to mention costly. and this is just my opinion but orangeville and the surrounding area is a little boring, for a twenty something couple with no kids. and the house prices that I looked at yesterday werent that much better than brampton.
I wasnt slamming where ppl live, dont take it so personally im merely saying what my experiences have been when ive been there. and for a twenty something couple like raingirl I felt I had a good judgement on it.
One more suggestion for you raingril would be to rent a house in brampton for a while and see how you do with the bills? :sorry:

raingirl
May 26th, 2005, 09:07 AM
Lizzie, that is great advise about the credit card to LOC..but he already has a large LOC...so I'm not sure they would give him another to pay off the credit card since he has only been employed for 4 months. Maybe in another few months, who knows. He has to really do some reorganizing of his life in a few areas (finances and he really needs to get a physical and go to the dentist!) but he just gets stubborn if I bug him about it... according to his sister in law, all of their family is like this. He also doesn't have any sick days for work, and only 5 days vacation per year that he doesn't want to waste taking a day off to do this stuff...

wjranch, I might take you up on that offer some time!! I'm still in the considering phase...and need to convince my BF a little more though...

Schwinn
May 26th, 2005, 09:34 AM
Hey, Schwinn, when you're not joking you're just fulla information! I think that was really useful.

I do that sometimes. It keeps me useful! :D

In Ontario do they have the "RAP"? I don't know if that's a French acronym, but here, 60 days before you go to the notary, you can take out a loan and buy RRSP's with it. Thirty days after notarizing, you sell the RRSP's to pay off the loan, and then reap the tax break in the spring. You have 15 years to repay the RRSPs, but the timeline I mentioned is very rigid.



They do, it's called the first time home buyers plan. Basically, any money you take out must have been in the plan for a minimum 90 days (otherwise it is taxable income). Also, CMHC used to decline mortgages if the new the money from the RRSP came from a loan (if that was all you are using for a down payment). I had clients who were recommended to do that by the mortgage rep. The rep wasn't impressed when I said to the clients, "So, you can't save up a down payment, but you are going to saddle yourself with a loan payment, and then in two years time an additional payment into your RRSP?" I'm not a big fan of that plan. I have had clients who used it to increase thier down payment, and that I'm a little more comfortable with. Alternatively, if they are getting enough of a tax refund back to pay off thier RRSP loan, but again, banks and CMHC used to REALLY look down on this practice (that being said, you can always find someone who can get it "pushed through" for you). Some advisors are against using RRSPs. My theory was, are you using the money you were putting in there for retirement? If so, you might want to think twice. However, if you have additional room in your RRSP that you wouldn't use anyway, and you are merely taking the money that you were saving for a down payment and putting it in your RRSP instead of a bank account, then, personally, I think you'd be nuts not to. Another thing to watch out for--it's tempting to put the money in a higher potential mutual fund. Although the rules around what a licensed person may or may not do, experience has shown me that if commision is involved, you may get such sage advice as "Trust me, there's no way that fund will lose this year" or "I guarantee you will get at least x%". By the way, these statements will result in the loss of the salespersons license if the governing body finds out. And whenever I had someone who didn't want to believe me, I suggested they ask for that guarantee in writing. I lost track of the number of people who came back to me amazed that the salesperson refused. Every time.

Schwinn
May 26th, 2005, 09:40 AM
Woops! Sorry, one more thing I wanted to add about the LOC. Banks will also take a percentage of the limit, not the balance, to figure it into your debt servicing (the only time I was able to get around that with our risk department was when I convinced them it was for emergencies only and the customer had it for quite a few years with little activity). Depending on the bank depends on the percentage. 5% is pretty much the norm for credit cards. So if you have a $5000 credit card, they will use $250 for a payment. If you consolidate it onto a LOC, and get a $10 000 limit for "just in case", you will now have a $500 payment credited to you (regardless of how much you owe on it). Of course, you can tell the bank you are willing to have the limit lowered, and that should eliminate any issue. Just wanted to give you a heads up on that.

raingirl
May 26th, 2005, 09:47 AM
Ok Schwinn..you lost me on that last post...

What is a debt servicing??

Say..I have credit card with $2000 limit that is paid off, and I have a LOC that is $6000 that I don't use (don't owe) is that a bad thing? Everyone tells me it's good to have lots of credit, makes your rating better, but it seems like it's a bad thing for getting a mortgage... Are you saying that because I have a credit card and LOC...they are negative?

Schwinn
May 26th, 2005, 09:59 AM
Ok Schwinn..you lost me on that last post...

What is a debt servicing??

Say..I have credit card with $2000 limit that is paid off, and I have a LOC that is $6000 that I don't use (don't owe) is that a bad thing? Everyone tells me it's good to have lots of credit, makes your rating better, but it seems like it's a bad thing for getting a mortgage... Are you saying that because I have a credit card and LOC...they are negative?

Sorry. Bank talk. Debt servicing is where they figure out the ratio of how much you owe vs. how much you make. Your payments divided by your income. It's not good to have LOTS of credit, but it is good to have lots of credit history. In other words, a credit card for a long time=good. 10 credit cards, not so much. As I said with regards to limits, they will take a percentage of the limit and use that as your monthly payment, regardless of the balance. Now, that being said, if you have a personal banker (or broker) who knows what they are doing and doesn't just fill in the blanks for a yes or no, if the limit of your credit is causing an issue, and you have a history of not having a large balance, they will go to bat for you. I have had people with large credit lines who rarely used them, but wanted them "just in case" (which is what a credit line is for). The numbers were actually rejecting the application, but I went to my credit department and proved my point, that this was not a credit line that was used often, but the customers were not comfortable with eliminating it. If the credit line was the only issue with qualifying, I was almost always able to get the mortgage approved. But I had to be able to prove my point, and everything else was solid.

They also look at net-worth, so they want to see a history of savings (like your RRSP).

Lizzie
May 26th, 2005, 11:51 AM
Schwinn is right. Whether you are using the credit or not, it's still considered money available to you---a risk if you are considering more debt. Banks like you to owe them money, but they don't want to risk losing money on you.

For example, if you have $10,000 of available credit in the form of credit cards, LOC's or loans, the bank won't want to give you more. They will say you already have enough available to you...why would we give you more if you dont have the money to pay.

You can get terrific credit simply by paying your student loans on time, paying your monthly credit card bills and that's about it. You don't need LOTS of money available to you for that.

Also, the credit bureau says it's helpful to increase your credit rating if you regulate your credit cards so that you never use more than 75 per cent of the limit. Something interesting I found on their tips for improving credit ratings site.