By: Harbinder Panesar

HOW MANY $$$$ DO I NEED TO BUY A HOME??

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Buyers usually ask me the following questions about buying a RESALE HOME or CONDO:

A. HOW MUCH MONEY DO I NEED TO BUY A HOME?

I can give you a rough idea but your bank or mortgage company will be best to advise you with the exact amounts based on your financial situation and the type of property you want to  buy:

 


* (Numbers for guideline only - Please Verify with Your Mortgage Company or Bank)

B. HOW MUCH WILL MY MORTGAGE PAYMENT BE EACH MONTH?

In the following table I am providing numbers for a mortgage rate of 2.5% for a 25 amortization period for your guideline only. You need to consult with your Financial Institution with the exact amounts.

**  (Numbers for guideline only - Please Verify with Your Mortgage Company or Bank)
** Also Payment Amounts will Change Depending upon your Mortgage Rate from the bank based on your financial information.

Is it better to pay $1791.87 as mortgage (where you save $962.82 in principal and build equity) or pay $1,791.87 in Rent where you save "ZERO" Dollars? yes



C. WHAT WILL OTHER COSTS BE?

OTHER COSTS ARE GENERALLY CLOSE TO 2-6% OF PURCHASE PRICE DEPENDING UPON LOCATION AND PRICE OF RESIDENTIAL RESALE PROPERTY:

1. Land Transfer Taxes:
These depend upon whether you buy  in TORONTO CITY (416 area code) or OTHER AREAS IN ONTARIO as mentioned in the table below:,


 
**** For Guidline only. Please Verify Exact Amount with Lawyer or Accountant.

In Toronto: If you or your partner are not a 1st time Buyer: You will pay Ontario Land Transfer + Toronto Land Transfer Tax.
Outside Toronto: If you are not a 1st time Buyer then you will pay only Ontario Land Transfer Tax.


1st Time Buyers will get a Rebate of $4,000 in Ontario Land Transfer and $3,725 in Toronto Land Transfer (If buying in Toronto) as mentioned in the 1st Time Buyer Column after rebates.

+++Please Note: All the Land Transfer Taxes and Mortgage numbers must be verified with Lawyers and Banks or Accountants. I am just giving you guideline information.

2. Moving Expenses: depends upon how far you are moving and how many personal belongings you need to move.
3. Lawyer Fees and other costs: Usually about $1,100 to $1,500 + other adjustments for Residential properties. Again it is best to check with your Lawyer.
4. Others:
Check with Banks or Mortgage Brokers for appraisals or for arranging mortgage etc., insurance premiums, home insurance etc.

D. HOW MUCH INCOME I NEED  IN ORDER TO QUALIFY TO BUY A HOUSE FOR $400,000? OR ....$$$"

Check it out with your financial institute.

E. WHICH DOCUMENTS I NEED TO PROVIDE TO THE BANK FOR A MORTGAGE APPROVAL?

Get following documents ready for the bank:

1. Put together your:
Pay stubs for the last 2-3 months,
- Notice of Assessment from Revenue Canada for the last 2 Years,
- Your Bank Statements,
- RRSP statements if you are a 1st time buyer.
- Your Employment Letter.
- Bank may ask for additional information


- Your Property Taxes (if you already own a house and want an investment property or property for your kids).

Do not delay your approval process because prices are climbing up fast !!!!!

2. Take these to your Bank or Mortgage Broker to find out the Maximum Purchase Price of a property you can buy.
3. Ask the Bank to give you in writing a Mortgage Pre-Approval Letter that you can show at the time you place an offer.

Once you have got the Approval Letter, make sure you do not spend any of your savings until you move into your new house.


Once your bank or mortgage agent/broker have all of your documents that they need and you have a pre-approval letter, you can look for the property that you can afford. Since the market is so busy, you should look at properties that are at least $20,000 to $30,000 less than the approval amount because most of the properties are ending up in multiple offers.

My other piece oof advice to all 1st time buyers is to buy a property within your approval amount. Many buyers want a dream home. It is hard to get everything when you are first time buyer in this market. You should rather get a home that meets your needs and is better than the basement or small apartment that you are renting. Your first home should be an investment that is saving you rent and building equity.  Stay in your 1st home for 2 years or so and build equity. Then use that equity to buy your dream home.

Please do not forget to call me if you have any questions or concerns.

I will be more than happy to help you with your move!!!

Remember Ordinary People Can Achieve Extraordinary Goals in Life!!!!!