Posts Tagged closing costs
2009 Canadian Federal Budget; What it means to Homeowners and Future Homeowners
Posted by Top Home Loans in Economy, Mortgage Advice, Mortgage News, Real Estate on January 29th, 2009
With the 2009 Canadian budget fresh off the press, a lot of new and interesting proposals have been presented to the existing and new homeowner. These proposals are designed to help to grow the economy while dealing with one of the worst recessions that Canada has seen in many years. The Conservative party had presented this list of new available programs:
New Homeowner Policies for 2009
- A $750 tax credit to help the first-time home buyers to cover closing costs. The closing costs can include land transfer taxes, legal fees, disbursements, property taxes, and other closing costs.
- An added $300 million in grants to the ecoENERGY Retrofit program.
- An added $50 billion dollars to be added to the mortgage buyback program. This will help to allow the banks to lend more money.
- A 15% tax credit, up to $1350, on eligible home renovations that are began before February `1, 2009.
- An increase to the RRSP Home Buyers Plan. Now first-time home buyers can withdraw up to $25,000 from their RRSPs to be used as a down payment. This is an interest free and tax free withdrawal.
- A increased amount of disclosures added to help consumers better understand what mortgage insurance is, and how it applies to the transaction. New government protections will help the consumer from being overcharged on insurance.
With all these added new policies, the Conservative minority hope to help the Canadian economy stay afloat during recessional times. The deficit that will result because of the budget in 2009 and 2010 will be much larger than in years previous. With these new additions to the real estate industry, hopefully it will be able to stir more activity in the real estate industry.
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Renovate or Relocate?
Posted by Top Home Loans in Mortgage Advice, Real Estate on November 10th, 2008
Deciding on whether to relocate or to redesign your current location can be an extremely difficult decision. There are many factors that you must consider, both financial and emotional, before making the final decision of staying or leaving. Even if a decision is a financially sound decision, it may not make economical or emotional sense for you to leave your current location. The following is just a few factors that you should consider when deciding to renovate or relocate.
Renovating your Current Residence
By staying at your current location, you may be able to save a ton of money renovating your house. This is especially economically feasible if you are the do-it-yourself type. It may take long hours to complete a project, but the savings will be well worth it. Even if you decide to hire a contractor, then you still may be able to get the renovations at a reduced price. Make sure to shop the market before deciding.
The major downfall of renovating is that you cannot change a lot of things about your property. For example, you cannot change the lot size of the property, you cannot change the year that the property was built, and you definitely cannot change where the property is located. There are other things that are extremely expensive to renovate as well. These include plumbing, heating systems, electrical systems, the foundation, and other potential crucial systems. This causes a limited amount of renovations that you can conduct on your property; however, the money saving potential is definitely there.
Relocating to a New Property
Sometimes relocating to a new residence will allow you to get a fresh start. You may buy a new or a resale house; however, you will get to choose what improvements are important to you and make sure the house comes with these modifications. This is an easy way to have a house with all the necessary improvements that you were looking for, with very little of the actual hands on work. The costs will differ quite substantially though. When moving from one property to another, you could see upwards of a loss of anywhere between 6% and 10% of the property value in relocating costs. It can get extremely expensive if you look at the numbers, but you are getting all the necessary modifications in exchange for money. Other than a financial downside, their is also the emotional downside. When moving to a new location, the new property does not have your memories. For example, if you have some children or a wife, then the first times for specific things like your child’s first steps or other deep meaningful events, then they will disappear when you move to the new location. You must make sure of what you will lose by moving to the new location and what you will gain. The important thing to remember is that even though money can buy a bigger, newer house, sometimes money cannot buy the things that mean the most to you and your family. Consider what you will loose before considering what you will gain.
When deciding to renovate or relocate, make sure that you take into all the considerations before making your final decision. This is not just a decision based on financial or time based needs; however, it is more important to consider the mental and emotion demands that the house has on you because those will prove to be the most long lasting demands on your overall happiness with where you live. Always consult your family before making a huge decision like relocating and take the time to make an informed decision. Don’t impulse shop when buying a home for your family.
First Time Home Buyers
Posted by Top Home Loans in Mortgage Advice on October 12th, 2008
Having a consistently growing mortgage market, it allows for almost everyone with a job to be able to find a house to live in. In most situations, home ownership is far greater than renting because it will allow you to build equity with every payment. Also, your investment will grow at an exponential rate because the bank will lend you money to leverage your investment.
Mortgage profitability
By reading reports about the consistent growth of house values in Canada, it is easy to see that it is rare for house prices to depreciate in value. Usually, home prices will rise from 3% to 10% annually. When was the last time your rent made you any money? This means that if you are paying interest only, then you will stull make money because your house will up in value. Mortgage payments are comparable to rent payments in most cases. For a 1 bedroom condo in Toronto the price can range from 800 to 1400 a month, and the mortgage payments are in the exact same range. Even if you are paying less for rent then you would if you purchased your own house, then you would still be losing money because the house will likely have appreciated.
Who should buy?
anyone who is considering paying rent payments should be looking into buying. Even if you are a college or university student, you and your parents should be actively looking into short term home ownership and determine if it will be more profitable to buy a property over paying expensive residence fees. Also, it will teach your child responsibility of maintaining there own property. If your child is working a part-time job to pay for school, then you can even generate some of the mortgage payment from them. If you have a full-time job, even if you have little to no savings, then you can still get a mortgage. Even though CMHC has removed 0% down on mortgages, you can still get a lender to pay your down payment for you; however, the interest rate will be a bit higher.
Down Payment and Closing Costs
On most new purchases, you will have to come up with at least 5% of the purchase price to cover the down payment of the property. A down payment is the banks way of verifying that you are serious about home ownership; however, most financial institutions offer programs that allow the buyer to avoid the down payment. The down payment is not the only fee that the buyer will encounter. The buyer will also need to worry about closing costs. These costs include legal fees, land transfer tax, property tax, inspections, appraisals, moving expenses, and all the other costs that come with buying a house. These costs are generally 1.5% of the purchase price and the bank will require that you are able to come up with this money from your own savings before they will approve your mortgage. It is important to plan for even more than the 1.5% of the purchase price just in case other fees come up.
Mortgage Insurance
When purchasing a new house, if you are putting down less than 20%, then the bank will have to apply mortgage insurance to your property. This form of mortgage insurance is used to insure the bank, so if you default on your mortgage, then the bank will not be liable. It is possible for the bank to request you get mortgage insurance even if you are putting more than 20% of the purchase price down on the property. Also, if you are new to Canada or you are self employed, then you could see your premium being much higher, and it would not be unlikely for the premium to be around 6%. It is required, by law, for certain mortgages to have mortgage insurance and the buyer must pay the insurance; however, the insurance can be added to the balance of the mortgage.
Investments, Grants, Loans, and Other Benefits for First Time Home buyers
In many contries, regions, and jurisdictions, governments have setup special promotions involving grants, loans, and other benefits for first time home buyers; however, it does take a bit of searching and a bit of luck. It is similar to if you visit a store, if you know a product will be on sale in the near future, then you won’t buy it, and you will wait to get the lower price shortly. It is like that in the mortgage industry; however, the sale is what existing special promotions are being offered by the government. For example, a first time home buyer was offered a grant for the down payment of a first home purchase as long as they live in the community for a minimum of five years. This is excellent because even if you move, then you are getting a tax free loan until the date that you move, and you are building up equity in the property.
The offers are frequently available; however, you must make sure that you search government pages on a regular basis. Also, phoning your government representatives and asking about these types of promotions is a good idea before house shopping.
For first time home buyers, it is easy to just jump into buying a home without thinking of the benefits or reviewing all the options; however, by taking a bit of time before beginning your home search and reviewing all the details, then you could save yourself a lot of money and a lot of hassle. Make sure that you know what you are getting into before you start the process, for the best advice is the advice you search for, not what you are given.