Agent Blogs

IF YOUR READY TO MAKE YOUR FIRST REAL ESTATE PURCHASE AND YOUR JUST SITTING ON THE FENCE, I THINK YOU SHOULD MAKE THE JUMP  ASSUMING YOU HAVE A PRE-APPROVAL FOR A  MORTGAGE AND THIS IS WHY:  CURRENTLY, THE GOVERNMENT OFFERS GREAT INCENTIVES FOR FIRST TIME HOME BUYER'S.  YOU CAN BORROW UP TO $20,000 PER PURCHASER OF YOUR RRSP'S TO GO TOWARDS YOUR DOWN PAYMENT.  YOUR OBLIGATION IS TO PAY BACK THE BORROWED MONIES OVER A 15 YEAR TIME BRACKET.  IT'S A WIN, WIN, WIN IN MY MIND.  YOU GET A LARGER DOWN PAYMENT ON YOUR HOME WHICH DECREASES YOUR MORTGAGE AND ALLEVIATES SOME IF NOT ALL OF THE CMHC PREMIUM CHARGED FOR HIGH RATIO MORTGAGES.  ALSO, YOU MAY RECEIVE A NICE TAX RETURN FOR THAT TAX YEAR BASED ON THE AMOUNT OF DOLLARS PUT INTO THE RRSP THAT YEAR WHICH IN MOST CASES IS USUALLY HIGH BECAUSE WHEN PEOPLE DECIDE TO PURCHASE THEY PREPARE FOR IT.  KEEP IN MIND THE RRSP MONEY USED FOR THE DOWN PAYMENT MUST BE IN YOUR RRSP ACCOUNT 90 DAYS PRIOR TO YOUR CLOSING DATE.  ALTHOUGH YOU HAVE TO PAY BACK THE BORROWED MONEY WITHIN 15 YEARS, YOUR PAYING IT BACK TO YOURSELF.  REALISTICALLY, YOUR GOING TO CONTRIBUTE EACH YEAR TO YOUR RRSP'S ANYWAY FOR RETIREMENT PURPOSES ARE YOU NOT?  ANOTHER BENEFIT THE GOVERNMENT OFFERS FIRST TIME BUYER'S IS EXEMPTION FROM PAYING LAND TRANSFER TAX WHICH COULD SAVE YOU A COUPLE THOUSAND DOLLARS.  ANOTHER FACTOR THAT MAKES IT BENEFICIAL TO BUY NOW ARE THE MORTGAGE INTEREST RATES BEING SO LOW.  THESE ARE THE LOWEST THE RATES HAVE BEEN SINCE I CAN REMEMBER.  IT MAKES A HUGE DIFFERENCE IN YOUR MONTHLY, BI-WEEKLY, OR WEEKLY PAYMENTS.
 

SO WHAT IS THE COST OF WAITING?  SUPPOSE YOU ARE PAYING $1000 PER MONTH IN RENT.  EVERY MONTH THAT GOES BY IN WHICH YOU HAVE NOT  PURCHASED YOUR FIRST HOME WILL COST YOU $1000 YOU CAN'T GET BACK.  IF ONE YEAR GOES BY THAT'S $12,000 YOU CAN'T GET BACK, NOT TO MENTION ANY EXPENSES ON TOP OF YOUR MONTHLY RENT SUCH AS GAS, HYDRO, WATER, ETC...  THE GOVERNMENT IS SLOWLY CHANGING THE WAY THE CANADIAN MORTGAGES ARE STRUCTURED WHICH COULD ALSO COST YOU.  A FEW YEARS AGO WE HAD THE 0 DOWN, 40 YEAR AMORTIZATION MORTGAGES, THAN THEY RECENTLY CHANGED THAT TO 5% DOWN WITH A MAXIMUM OF A 35 YEAR AMORTIZATION.  I'VE READ IN RECENT ARTICLES THAT IT WILL POTENTIALLY CHANGE AGAIN TO 10% DOWN WITH A  25 YEAR AMORTIZATION MAXIMUM.  IT WILL EFFECTIVELY BE MORE DIFFICULT FOR FIRST TIME HOME BUYER'S TO GET INTO THE MARKET BY INCREASING YOUR DOWN PAYMENT AND INCREASING YOUR MORTGAGE PAYMENTS.  THESE INCREASES HAVE MANY BENEFITS TO THEM BUT MOST IMPORTANTLY THEY STABILIZE OUR CANADIAN ECONOMY, NEVER THE LESS IT WILL MAKE IT MORE DIFFICULT FOR FIRST TIME BUYER'S TO PURCHASE.  THE SAME WAY THE GOVERNMENT CAN CHANGE MORTGAGE STRUCTURES THEY CAN ALSO PULL THE PLUG ON THOSE FIRST TIME HOME BUYER PERKS SUCH AS THE ABILITY TO USE YOUR RRSP'S AS A TAX FREE DOWN PAYMENT AND THE EXEMPTION FROM LAND TRANSFER TAXES.  I'M NOT SAYING THAT WILL HAPPEN, BUT YOU NEVER KNOW.  WHY WAIT UNTIL IT DOES HAPPEN?  ANOTHER COST OF WAITING IS THE INTRODUCTION OF THE HST TAX ON REAL ESTATE PURCHASES EFFECTIVE JULY 1ST, 2010.  TO AVOID THIS TAX YOU WOULD HAVE TO PURCHASE WITH A CLOSING DATE BEFORE JULY 1ST, 2010.  THE APPROXIMATE COST OF THE HST TAX IS $1500 ON A $300,000 PURCHASE.  ANOTHER COST THAT HAS TO BE MENTIONED IS INFLATION.  THE LONGER YOU WAIT TO PURCHASE REAL ESTATE THE LESS YOU WILL CAPITALIZE  ON THE PROPERTY VALUE INCREASES FROM YEAR TO YEAR.  ON AVERAGE REAL ESTATE IN THE BARRIE AREA HAS INCREASED BY 3-4% EACH YEAR.

I HOPE I HAVE MADE SOME SOLID POINTS AS TO THE COST OF WAITING TO PURCHASE REAL ESTATE.  THESE POINTS ARE INTENDED FOR THOSE WHO HAVE BEEN PRE-APPROVED BY THEIR BANK BUT JUST CAN'T PULL THE TRIGGER FOR ONE REASON OR ANOTHER.  TIME IS OF THE ESSENCE IN THIS BUSINESS AND SO IT SHOULD BE.  I HOPE I CAN WORK SIDE BY SIDE WITH ALL THOSE WHO ARE CONTEMPLATING THEIR FIRST REAL ESTATE TRANSACTION.  ONE OF THE MAIN REASONS I LOVE MY JOB IS THE JOY AND EXCITEMENT EXPERIENCED BY CLIENT'S WHEN PURCHASING THEIR FIRST HOME.  MY GOAL IS TO MAKE EVERY TRANSACTION A MEMORABLE ONE AND TO SERVICE MY CLIENT'S THE BEST I CAN.