You know the old saying: “Only two things are certain in life: Death & Taxes?” Well that saying should have a third element to it: Mortgages.
Mortgages get a bad rap. They're often pegged as boring, hard to understand or confusing, which is too bad because everyone reading this blog is bound to have a mortgage at some point in their life. To help unravel the mysterious and facinating world of mortgages and
This week, I've enlisted the help of my friend Bryan Guertin, Mortgage Broker at Mortgage Intelligence to help answer some questions regarding first time homeowners and their
Has the average age of first time homeowners changed over the years? Why is
It has gone both ways.
We have had young couples, between ages 21 & 25, buy their first home,
normally where their parents have provided the down payment.
They are recently out of school with good jobs & earning power & buying
But, we are seeing more first time buyers in their mid 30's & early 40's
where they could not buy in their younger years because they could not
afford to own due to house pricing & the inability to come with the
minimum 5% down payment & the closing costs which we estimated to be 1.5 %
of the purchase price.
In today's market, you normally need 2 incomes to be able to qualify & if a
new married couple have a family right away, saving for a down payment
What are the most common questions you're asked by first time homeowners?
"What cash rebates do I get?"
They are surprised there are no freebees.
The only government rebate for a first timer buyer is on the Land Transfer
Tax, the Ontario government sales tax that has to be paid when ownership to
a home is registered at the Government Registry office. The rebate is $2000,
but you would have to buy a house for $200,000 or less where the rebate
covers the cost. Example- if you bought for $350,000 Formula is 1.5% x price
less $1525. 1.5% x 350,000 =5250 less 1525= $3725 less rebate of $2000=
$1725 tax to be paid on closing.
What are the biggest mistakes you see people make when taking out their
The big mistake is not getting preapproved for a mortgage & the amount
that you qualify for.
People do not understand the importance of their credit rating as it will
dictate the rate they will get & even if they can get a mortgage.
There is a credit scoring system called the beacon score, you should time to
time review your score by contacting Equifax , you can get a copy of your
credit and score free.
The average score is 680-700 out a total of 900. Mortgage lenders want to
see a 600=650 minimum.
I have had clients which had to put their dream house on hold, because of
credit issues or that brand new car you just bought with payments of $450
per month Blew your ratios out of wack.
How do you predict the changes implemented by Finance Minister Jim Flaherty
will further effect first time homeowners?
Because the government new guidelines has reduced the amortization down to
25 years, it has reduced the affordability of homes in GTA area where prices
are high. It also has increased the monthly mortgage payments. This will push first
time buyers into slightly cheaper homes or in the GTA, price them right out
of the market.
What is the best advice you can give to first time homeowners about to take
out their first mortgage within a year from now?
Plan well ahead, get yourself preapproved with a mortgage broker who will
take the time to set up a plan. If there is credit issues, what has to be
done to correct them. If you have too much debt, what has to be done to get
your credit in line. The amount of mortgage you qualify for, the amount of
down payment you will need & the extra money you will need for the lawyer &
Here are this week's best rates from Bryan Guertin:
Thank you for reading.
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As always, if you would like to discuss your current real estate situation, I would love to offer my expert knowledge. You can reach me at 905 339 5270, or by email at firstname.lastname@example.org.
Passionate About Real Estate. Devoted to My Clients.
CENTURY 21 MILLER REAL ESTATE LTD.
467 Speers Road
Ontario, L6K 3S4
Direct Line: 905.339.5270 E-Mail: email@example.com