Transitioning from Renter to Homeowner

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:

www.davegriffin.ca or www.kawarthamortgage.com

Call us at 705-745-3522

Toll Free at 866-488-3522

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Examining Revenue Property Options

Given the current national credit-crunched lending environment and the slowing real estate market – which has shifted to a buyers’ market – coupled with lower interest rates, now is an ideal time to invest in the purchase of revenue property.

After all, although the real estate market slowdown has seen prices drop and interest rates dip, rental income has not wavered – making now an optimal time to start building your revenue property portfolio or continue adding to your existing list of properties.

In order to take advantage of this opportunity, the key is to work with a mortgage broker, like Dave Griffin, who is an expert in this niche and can provide you with a wealth of knowledge and ongoing information that will help you make informed investment decisions and feel at ease throughout each purchase.

Your mortgage broker offers an invaluable service to real estate investors because, if the mortgages on your investment properties are not set up properly from the on-set of each venture, you will not be able to get future financing – a necessity for continuing to build your portfolio of revenue properties.

Your mortgage broker who is an expert in dealing with real estate investors know that a portfolio approach must be taken to ensure future financing for those looking to purchase revenue properties. Dave Griffin will ask you in detail about your specific property investment goals and develop a game plan for the next five or 10 years based on these goals.

Your mortgage broker can work with you in order to determine where you currently stand in terms of your real estate goals, where you need to be to meet those goals and the steps involved to get you there.

Keep in mind, however, that your plan should be revisited with your mortgage broker at least annually to ensure you’re still on track.

A team of Experts

A mortgage broker who specializes in helping clients acquire revenue property is also likely to partner with other investment property experts, including real estate agents, lawyers, accountants, insurance agents and contractors, to name a few, which enables your mortgage professional to provide valuable information to you through this knowledge network they have created.

By forming ties with other trusted experts, your mortgage broker is able to provide you with a one-stop shop for meeting all of your real estate investment needs.

Your mortgage broker can also help direct you to other organizations that will offer you further insight into your real estate investment needs. If you join groups such as the Real Estate Investment Network (REIN) or even a local Rental Owners and Managers Society (ROMS), for instance, you can receive a wealth of added knowledge catered to your revenue property needs.

So before you begin building your revenue property portfolio, ask Dave Griffin of Dominion Lending Centres Griffin Financial Group what he can do to cater to all your real estate investment needs.

For inquiries as to how Dominion Lending Centres Griffin Financial Group can help assist you with your revenue mortgage experience

Visit our websites:

www.davegriffin.ca or www.kawarthamortgage.com

Call us at 705-745-3522

Toll Free at 866-488-3522

Connect with us!

 

Buying versus Renting

At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. And purchasing a home is one of the biggest decisions most people ever make.

Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.

Each month when you make your mortgage payment, you are building equity in your home.

Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.

At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home

and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.

Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.

As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.

If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.

Since we’re currently in a buyer’s real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.

Some disadvantages of buying a home

Since it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.

For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.

Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.

While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, and moving, renovation and other selling costs.

Real estate is, however, usually considered a good investment over the long term.

When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.

If you’re thinking of buying your first home, Dominion Lending Centres mortgage professionals can answer all of your mortgage-related questions.

Be sure to contact us, Dominion Lending Centres Griffin Financial Group, if you have questions about your situation.

Visit our websites:

www.davegriffin.ca or www.kawarthamortgage.com

Connect with us!

 

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