Transitioning
from renter to homeowner is one of the biggest decisions you’ll make throughout
your lifetime. That’s why it’s essential to surround yourself with a team of
experts – including both a mortgage and real estate professional – to walk you
through the steps to home ownership, answer all of your questions and concerns,
help you decide what kind of home you can afford and get you pre-approved for a
mortgage.
With
interest rates still hovering around “emergency” levels – low rates never
before seen by your parents and even your grandparents – now is an ideal time for
first-time homebuyers to embark upon homeownership.
Down
payment
The
main reason many renters feel they can’t afford to purchase a home has to do
with saving for a down payment. But there are many solutions available today
that can help first-time buyers with their down payments.
Many
lenders will allow for a gifted or borrowed down payment. And of those lenders
that will not provide this alternative, many offer cash-back options that can
be used as a down payment.
Better
yet, there are programs available from some financial institutions where they
will offer a “free down payment” or a “flex down”. Of course, you will end up
paying about 1% more in your interest rate, but the program will help you get
in the homeownership door and start accumulating equity earlier. You must,
however, stay with the original lender for the full initial five-year term or
else you’ll have to pay the down payment back.
Last year, a $5,000 increase was made
to the RRSP Home Buyers’ Plan, meaning first-time homebuyers can now withdraw
up to $25,000 from their RRSPs for a down payment – tax- and interest-free.
And if you’re part of a couple making
a home purchase together, you can each withdraw up to $25,000 from your RRSPs.
Educating
and coaching
There’s
an endless amount of information available to prospective homeowners – through
the Internet, friends, family members and anyone willing to voice their opinion
on a given subject. What you really need, therefore, is education and coaching
as opposed to being bombarded with more information.
Speaking
to a mortgage professional in order to obtain a pre-approval prior to setting
out home shopping can help set your mind at ease, because many first-time
buyers are overwhelmed by the financing and buying processes, and often don’t
know what it truly costs to purchase a home. Real examples can go a long way in
showing you what it costs to buy a home in your area versus what you’re
currently paying in rent. For instance, if a renter is currently paying $800
per month, with that same payment (including taxes) they could afford to buy a
$120,000 home. And assuming real estate values increase 2% per year over the
next five years, the new homeowner would have accumulated $27,000 in equity in
their home. If they continue renting, however, this $27,000 has generated
equity in someone else’s home.
For inquiries as to how Dominion Lending Centres Griffin Financial Group can help assist you with your mortgage experience
Visit our websites:
Call us at 705-745-3522
Toll Free at 866-488-3522
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