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Discussion Starter · #1 ·
I have a bunch of questions about this whole thing. It may sound disjointed but I can't sleep thinking about some of these <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br><br>
DH and I set a goal a while back to buy a house, but have only recently got serious about saving money. The thing is, a couple of houses in areas we want to live have popped up in our current price range according to the mortgage calculator (from the website of the bank we want our mortgage through). I'll bold my questions so they don't get lost in my jibber jabber <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"><br><br><b>One is how can you find out about first time home owner buyer incentives?</b> I live in Canada and lots of people tell me there are great advantages to first time home buying, but I can't seem to find any. If there are, do you have to go through a certain bank for them, or can you choose?<br><br><b>Second, would it be better to keep saving a couple of years or to buy now now?</b> I'm sure we could find a perfectly suitable house down the road but since we're getting older, we're feeling the need to get on with this stage in life.<br><br><b>How much is an acceptable downpayment? What should I expect in other fees that are involved in buying a house (ie, cost of things beyond downpayment)? Or in other words, how much cash should we have on hand before getting into this?</b><br><br><b>Do you seek to get approved for a mortgage before seriously looking at homes or do you wait until you find something?</b><br><br><b>Is there a website out there that can baby step you through the whole process?</b> I feel myself getting confused at everything and don't want to seem totally ignorant when we do start the home buying process.<br><br>
I think that's it for now; I probably have more I can't think of right now. We don't mind waiting, but then again, we are very excited to move into this new phase of life and out of the apartment scene <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile">
 

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I don't know anything about Canada specifically, so take everything I have to say with that in mind.<br><br><div style="margin:20px;margin-top:5px;">
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<div>Originally Posted by <strong>bwylde</strong> <a href="/community/forum/post/8134641"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;"><b>One is how can you find out about first time home owner buyer incentives?</b> I live in Canada and lots of people tell me there are great advantages to first time home buying, but I can't seem to find any. If there are, do you have to go through a certain bank for them, or can you choose?</div>
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I don't know a lot about them, but generally in the US they are offered through the banks, a mortgage broker would be able to give you more information.<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;"><b>Second, would it be better to keep saving a couple of years or to buy now now?</b> I'm sure we could find a perfectly suitable house down the road but since we're getting older, we're feeling the need to get on with this stage in life.</td>
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It really depends on your situation and what you think the housing market might do. In most parts of the US (not sure about canada) the housing market has really stalled or even fallen a bit, its not going to skyrocket in the next couple of years, so there is no real reason to buy right now - you will not get priced out of the house you want because of rising home prices. However, some markets are still going up and I don't know about yours.<br><br>
Secondly, if right now you are spending significantly less on rent than you would on a mortgage payment, then it might be better to wait because you will spend less on housing for a while.<br><br>
On the other hand, quality of life is a factor - if you really are unhappy with where you are living now and really want to be in a home, that might be a reason you don't want to wait.<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;"><b>How much is an acceptable downpayment? What should I expect in other fees that are involved in buying a house (ie, cost of things beyond downpayment)? Or in other words, how much cash should we have on hand before getting into this?</b></td>
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Personally I prefer 20%. Any less than that and you are paying a higher interest rate on your money. Either because you are forced to pay PMI (personal mortgage insurance - insurance the bank makes you take because you have so little equity just in case you default on the loan and the house can't be sold for what your loan is worth) or you structure the mortgage to avoid PMI by say taking out a first for 80% and a second for 10-15%, you pay a much higher interest rate on the 10-15%. Even if you are willing ot pay this extra, generally you want no less than 5% down payment - some banks will give you a loan with less, but again at a substaintial rate hike. (Unless you are a part of a an assistance program like FHA or VA in the US)<br><br>
As for other costs, ones I can think of:<br>
- Paying for a home inspection<br>
- Closing costs on the mortgage (1-2% of the loan generally) - this is stuff like title insurance, attorney's fees, loan origination fees, etc<br>
- Taxes (not sure what these are in canada)<br><br>
Also, keep in mind that home ownership is more costly in other ways than the mortgage payment. Make sure when figuring out what you can afford, you are taking into account annual real estate taxes you have to pay plus maintenance, heating, electricity, other utilities, the cost of new items like a lawn mower and other equipment, moving costs, etc. When something breaks, you need to pay to fix it, and regardless of the home, something will break at some point.<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;"><b>Do you seek to get approved for a mortgage before seriously looking at homes or do you wait until you find something?</b></td>
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Yeah, its a good idea, though you can wait unti lyou find something, it doesn't make sense to be looking at homes you can't afford. It doesn't take much time to sit down with a mortgage broker and get pre-approved. In most US markets, sellers want a pre-approval letter with your offer.<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;"><b>Is there a website out there that can baby step you through the whole process?</b> I feel myself getting confused at everything and don't want to seem totally ignorant when we do start the home buying process.</td>
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Just from googling:<br>
Here is a website from HUD (US housing and urban development) - <a href="http://www.hud.gov/buying/" target="_blank">http://www.hud.gov/buying/</a> that talks about the process, some will be us specific<br><a href="http://www.tdcanadatrust.com/mortgages/buyingfirst.jsp" target="_blank">http://www.tdcanadatrust.com/mortgages/buyingfirst.jsp</a><br><a href="http://www.realtylink.org/buyers/buyers_guide.cfm" target="_blank">http://www.realtylink.org/buyers/buyers_guide.cfm</a><br><br>
A realtor can help you too, that is what they are there for - if you ever feel like they are pushing you into something you don't want, then drop them and get another one, they should be just working with you to figure out what is best for you.<br><br>
I hope that helps, perhaps someone else can give you more info specific to canada.
 

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Just a warning about mortgage calculators... They are wrong 133% of the time. Unles you will be prepaying taxes and Insurance they are waaaay too low. If you use Escrow, and your property tax is about average, the best calculator is to take ~1% of the total that you borrowed.<br><br>
For example, we borrowed 157 and our payments are 1610 a month.<br>
According to all the mortgage calculators we should be paying like 900 a month.
 

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<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>ShaggyDaddy</strong> <a href="/community/forum/post/8135295"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Just a warning about mortgage calculators... They are wrong 133% of the time. Unles you will be prepaying taxes and Insurance they are waaaay too low. If you use Escrow, and your property tax is about average, the best calculator is to take ~1% of the total that you borrowed.<br><br>
For example, we borrowed 157 and our payments are 1610 a month.<br>
According to all the mortgage calculators we should be paying like 900 a month.</div>
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Most of the calculators on realty sites and iffy mortgage sites include only principal and interest. If you know the approx taxes and insurance per year, you can divide that by 12 and add to the principal and interest calculator. Interest rates vary and even a quarter percent difference impacts the payment a lot (especially in expensive areas) so taking 1% of the loan amount is not always accurate either. Additionally, there are very conservative PITI calulators online at banking and finance news sites which are less rosy on how low the payment will be and less rosy on how much you can afford.
 

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Discussion Starter · #5 ·
Thanks for all the great info. It was all useful. I was kind of figuring the calculators might be off so we're aiming for the low end of what we can afford just in case, trying to keep in mind all the extras. I *know* we can't afford a 100K, lol! Fortunately realty is cheap here.<br><br>
Anyway, we have definately decided to put house hunting on a backburner for a while. We hate debt so we want to be very careful about putting ourselves in too deep when we're not prepared enough.
 

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The absolute best baby step site is <a href="http://michaelbluejay.com/house/index.html" target="_blank">http://michaelbluejay.com/house/index.html</a><br><br>
He will take you through the process every step of the way, almost holding your hand. I had bought two houses before, and we just bought our third, and I learned from his guide.<br><br>
For mortgage information, debts, and even places where you might be able to get grants for closing costs, go to <a href="http://www.creditboards.com" target="_blank">http://www.creditboards.com</a> and check out their mortgage forums.<br><br>
Good luck!
 

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And don't believe what the banks tell you about "How much house you can afford" Bank of America said we could afford a house up to 120k and then tried to screw us on a $45k house morgtage because we didn't have enough income. How the hell did they expect us to be able to pay for the $120k then? <img alt="" class="inlineimg" src="/img/vbsmilies/smilies/dizzy.gif" style="border:0px solid;" title="Dizzy">:<br><br>
We are getting a FHA loan that will also cover the downpayments and other things, it has a great rate of 5.5% for fist time homebuyers. We read about it online through the HUD website, but we didn't fully understand it until we went to one of their approved lenders and talked in person.<br>
Just because you are a first time buyer doesn't mean they toss your credit score out the window or anything. My banker said this was the first FHA loan he has actually gotten for anyone because most people who are low-enough income to qualify end up having too bad credit.<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">Anyway, we have definately decided to put house hunting on a backburner for a while. We hate debt so we want to be very careful about putting ourselves in too deep when we're not prepared enough.</td>
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DH and I looked last year and decided to wait then too. We saved up some more cash on hand before we went looking again. In the end, we are getting a better deal too! If you don't feel prepared then don't feel bad about waiting. but when you feel like you are signing your life away on paper don't freak out either! There were times in the last few weeks that I would panic about the debt thing too. We have no debt except student loans so adding this much more just seems astronomical, .....and it's a CHEAP house!
 

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<div style="margin:20px;margin-top:5px;">
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<div>Originally Posted by <strong>oneKnight</strong> <a href="/community/forum/post/8147929"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">And don't believe what the banks tell you about "How much house you can afford" Bank of America said we could afford a house up to 120k and then tried to screw us on a $45k house morgtage because we didn't have enough income. How the hell did they expect us to be able to pay for the $120k then? <img alt="" class="inlineimg" src="/img/vbsmilies/smilies/dizzy.gif" style="border:0px solid;" title="Dizzy">:</div>
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Very true, and on the other side, they are often happy to give you a loan that would be more than you can really afford. That's what people mean when they say 'house poor' - they bought a much bigger house than they could afford and the bank happily let them.
 
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