Tips for a first time home buyer

[223MB]

What are some words of wisdom you folks have for a first time home buyer?

[sns2]

1) Don't take out the maximum mortgage you can. Life will happen. Rainy days will come. Things will break down. You want to be able to have a few bucks to live.

2) Get an inspection unless it is brand new.

Best of luck!

[Arty]

Don't buy.

(The 1950's and 60's are over).

[Newview01]

Don't buy.

(The 1950's and 60's are over).

Why not?

Easiest way to gain equity.

I feel sorry for those struggling to put together a down payment and are stuck paying more on rent than what their mortgage payment would be.

X2 on getting an inspection.

[Arty]

Why not?

Easiest way to gain equity.

I feel sorry for those struggling to put together a down payment and are stuck paying more on rent than what their mortgage payment would be.
[...].

Hardly. The best way to 'gain equity' is to save your money and invest it so that YOU are getting paid interest, instead of paying out blood money on interest and overpriced accomodation at peak prices. Housing which will need a bulldozer by the time it's paid off (if ever).

Then you are stuck paying hundreds of thousands of dollars interest to the bank on top of massively overpriced RE, spiked by artificially low interest rates. Don't you read the financial press at all?

Cheap interest and inflated money chases up capital prices, leaving you holding the bag when interest rates swing back up again to normal. Same as bond prices.

[Trochu]

-Don't buy the most expensive house you can "afford";
-New or not, get an inspection; and,
-Don't buy the nicest house in the neighbourhood.

[airbornedeerhunter]

If you buy new, research the builder. Some are great, some are good, some are ok and some are scumbags.

The guy that built mine is great, the poor neighbour 2 doors down bought from a builder who has since been banned by the developer and has at least 3 pending court cases against him from people he has screwed.

Do your homework.

[hilt134]

Don't?

Well the first thing to decide is if you are going to find a great house or fix one up. If you are going to renovate get it done fast it's incredibly stressful. Also get your self someone you trust toook with you. They have to have some experience with homes and what to look for.

If you have some questions ask around the neighborhood things like mold or mice can be more common is certain areas. Also it's a good way to find out what the areas like.

If the house has a basement take a bit of time and check it out. Rum the furnace of you can as the last place I rented only stank like mold and mildew once the furnace pumped the air through the basement where I lived. Take a look if you see any bugs and learn why they are there as certain species like damp or dry.

[jungleboy]

1) Don't take out the maximum mortgage you can. Life will happen. Rainy days will come. Things will break down. You want to be able to have a few bucks to live.

2) Get an inspection unless it is brand new.

Best of luck!

Be aware that many home inspectors are not as qualified as they would like you to think. We recently sold our 3 yr old modular and the inspector they hired was a complete failure. He told the perspective buyers that the roof vents were not cut in , the insulation was insufficient . We called the dealer we bought from, who quickly sent out a contractor to fix these issues.
It turned out to be completely unfounded and incompetence on the part of the inspector. There was absolutely nothing wrong with the home but it nearly cost us a deal.It did cost me out of pocket to pay for their stupidity.

I think a lot of these inspection companies feel that if they scuttle a few deals it is good for business as they will be called to inspect the next home since they "saved the buyer" from the last deal.

[223MB]

Thanks for the advice so far! I’ll add we are hoping to get a place in a smaller community like leduc, Devon or calmar. We aren’t really interested in new as the newer communities are too crammed. A acreage would be awesome but the costs associated with them could be too much.
Does anyone have any experience with buying a piece of land and putting a modular home it? Is it a cheaper alternative?

[fishtank]

calmar is probably the cheapest in price , consider its on about 15 away from Devon for shopping and grocery’s , make sure it well inspected especially the basement and foundation if it’s older Home . Budget for some upgrade repair, taxes , insurance , furnace , roof, windows etc and extra cost associated with being a home owner ...

[Fwee6]

Spend the money for high quality windows.
We got double pane junk in our build from 3 years ago.

[Rustynail21]

Find a good Mortgage Broker or Banker and get an idea on what you can afford. With the new rule changes that just happened Jan 1st have someone run the numbers. They'll also be able to help you find a Realtor. Use a Realtor, even if dealing with a builder, they'll protect your deposit should something happen and it doesn't cost you anything.

These two people will be worth their weight in gold!

Also don't forget about the homebuyers program, use your RRSP to help supplement your downpayment. It can save you a fortune on CMHC / Insurance fees depending on your savings.

Go biweekly on your payments if you can, knocks years off your mortgage.

I'm in the industry and am available via PM. I don't deal direct to consumer so I can be unbiased and will give you the straight goods if you have q's or want to name drop.

[AndrewM]

Put 25,000(max if I remember correct) or less of your downpayment into RRSP’s and then remove as a first time home owner. Needs to be there 90 days if I remember correct. Basically you take a loan from yourself and you will get money back from taxes. Put that money back into your RRSP or towards your house.
Try to put down enough to avoid CMHC fees. If you sell your house you do not get that money back. It’s a fixed amount of interest and you will have to pay it on your next purchase as well unless you get put down enough.

[Alex1272001]

This is a buyers market. Don't be shy about negotiating prices. Don't let a pushy real estate agent pressure you into offering more then you feel comfortable with.

[DiabeticKripple]

I too will be buying my first home towards the end of summer / fall. I’m trying to save up the 20% for the down payment to avoid CMHC insurance. That insurance is like lighting a match to your money.

[Newview01]

Hardly. The best way to 'gain equity' is to save your money and invest it so that YOU are getting paid interest, instead of paying out blood money on interest and overpriced accomodation at peak prices. Housing which will need a bulldozer by the time it's paid off (if ever).

Then you are stuck paying hundreds of thousands of dollars interest to the bank on top of massively overpriced RE, spiked by artificially low interest rates. Don't you read the financial press at all?

Cheap interest and inflated money chases up capital prices, leaving you holding the bag when interest rates swing back up again to normal. Same as bond prices.

How is paying $1500 on rent a better decision than paying an $1100 mortgage payment?

[Sporty]

If you plan to work with a realtor, do your homework. One who will really look out for your best interests and not just the commission number they'll make. Our latest realtor was fantastic, she'd show us homes and then the "mom" would come out and she would give us the real pros and cons of the property. From price to the area the property was in. She could have encouraged us to purchase the most expensive property we looked at but with her solid advice, we went a different route.

[Prairiewolf]

What are some words of wisdom you folks have for a first time home buyer?

First off, congratulations. Being a homeowner is awesome but buying a house was the most stressful thing I've ever done. Things I wish I'd listened to more include:

*Try to stick to your budget, but understand that what is truly expensive is buying alot of homes. If you find one you really love (more on that below) get it, you'll end up buying it at some point.

*Understand what you are and are not buying. A brand new house always looks shinier, but fences, decks, and landscaping add up quick.

*Make an inspection a condition, even if its new. You'd be surprised.

*Don't sign on for just the lowest rates you can with mortgage broker, understand the fine print like double up payments, lump sums etc. Those make a difference sometimes.

*Don't rush - they're making and selling these every day.

[58thecat]

Completely depends on your financial situation...if you got a few bucks buy a fixer upper or a rental place in which you can life in and rent out a space helping cut over all costs and the fixer upper is a no brainer, location, potential to turn over with a little elbow grease and then sell, move into another type property and repeat. I guarantee well under 20 years you will be mortgage free in a house that you completely enjoy and then put that would have been mortgage payment away into a plan for retirement, emergency funds and ihhhh yeah trips and a few toys....not hard to do. Break it down into 5 year plans, stay the course and you would be surprised how time fly's by and you own everything and then some....

[223MB]

Lots of talks on RRSP’s for the down payment. I currently don’t have RRSP’s as I use have a good pension. most of our down payment is in TFSA’s.

[Newview01]

Lots of talks on RRSP’s for the down payment. I currently don’t have RRSP’s as I use have a good pension. most of our down payment is in TFSA’s.

That's good. Better than RRSPs as no need to pay them back.

[BUSHRVN]

calmar is probably the cheapest in price , consider its on about 15 away from Devon for shopping and grocery’s , make sure it well inspected especially the basement and foundation if it’s older Home . Budget for some upgrade repair, taxes , insurance , furnace , roof, windows etc and extra cost associated with being a home owner ...

Calmar has seriously over inflated taxes.

[sewerrat]

Find a realtor that works for you, he /she should be looking for flaws and poking around in the house and not just stand there and tell you all the positive things about the place.

In the conditions get your sewer line scoped which is an extra cost on you but it is worth it. Specially if the home is from the 40's 50's 60's and 70's. abd even the 80's

I'm so glad I did it with my current house as the old clay tile sewer was loaded with root and cracks. So I got a new sewerline out of the deal which was a 60/40 cost between the seller and me.

[fishtank]

How is paying $1500 on rent a better decision than paying an $1100 mortgage payment?

That depend on your down payment and mortgage and the cost of repair and maintenance and property taxe$$$$ etc...) vs rent amount
Calmar has seriously over inflated taxes.

Didn’t know that:scared0018:... property taxes another thing to consider on becoming Home owner...

[BUSHRVN]

Like most have said, don't go big. That "Castle" gets really old really fast when all you can afford to do is sit in it and stare at the wall because you haven't got a dime left to buy a Tims even. Forget about the Jones's, buy something that is VERY affordable for your budget and upgrade later when you have built up equity. I have watched too many family members buy castles that are their first homes and loose them in a few years due to the stress and a hick-up in their income. Very sad to watch from the sidelines. Buy a house for you, that's practical and not to impress anyone else.
And definetly make sure it's inspected by a REAL inspector, this could save you in such a serious way.

[D4l3k]

Prices are still going down especially for what you are looking for

I have been on the look out for a year or so and I'm glad I didn't buy a couple of the places I looked at since they have decreased in value by about 50-80k in the last 6 months with no sign of it stopping

My real estate agent (who is awesome) suggests waiting for it to bottom out more, lots of over priced garbage out there

[densa44]

I've done this a few times. I don't think that I would recommend it for a rookie. You can get very nasty surprises with things like wells, power, gas lines, and septic tanks. Maybe even a pump out tank.

If you want to live on an acreage, try the rent first advice. The majority of people only last 18 months (one winter and the prospect of the next one!).

BTW we have lots of experience at this sort of thing and are old. We bought a 1/2 section, took first parcel out, got piped water from the county for $10K and used the power and gas that was there from an old homestead. We bought a RTM house, with no basement.

We are snug as bugs in a rug.

I think much of the advice is pretty good. Arty's advice might turn out to be good too, it is very hard to predict the future. Home ownership has more features than just money.

[artie]

I was able to pay weekly and it cut the years down from 20 years to 13 years. The only problem is a few months have 5 weeks in them so it was tight. The way I looked at it pay monthly or weekly it amounts to the same stress. Had some friends who the first 5 years they put all the money they could on extra payments and it helped them pay the house off sooner. You are not there yet but do not retire until your house is paid for or you might lose it. Also try not to have other payments like new car payments.

[223MB]

I was able to pay weekly and it cut the years down from 20 years to 13 years. The only problem is a few months have 5 weeks in them so it was tight. The way I looked at it pay monthly or weekly it amounts to the same stress. Had some friends who the first 5 years they put all the money they could on extra payments and it helped them pay the house off sooner. You are not there yet but do not retire until your house is paid for or you might lose it. Also try not to have other payments like new car payments.

Both of our vehicles will be payed off in the next 6 months. We made sure we don’t have any debts going into our home purchase.

[Newview01]

That depend on your down payment and mortgage and the cost of repair and maintenance and property taxe$$$$ etc...) vs rent amount


When you rent, you are not gaining equity. When you are paying into a mortgage, you are.

Does anyone know where rent is less than what the mortgage is worth? Last time I checked landlords aren't interested in charging less rent than what they are paying on the mortgage / property tax.

[HyperMOA]

Lots of talks on RRSP’s for the down payment. I currently don’t have RRSP’s as I use have a good pension. most of our down payment is in TFSA’s.

If this is your only option for a down-payment; so be it. I would go and speak with an investor however, and see if there are some other options. My opinion (and its only an opinion) is that you should use that TFSA money as a last resort. My opinion is that the TFSA is the best tool to save for retirement. Every dollar you make in your TFSA the government gets nothing. There is nowhere else you can make money tax-free. Everyone 18 years old or older should be maxing out their TFSA, and leaving it to grow.

If you have to use your TFSA, maybe buy RRSP's with the TFSA. Use the RRSP's to purchase the house. Use the tax deduction from the RRSP's to reinvest into your TFSA. That is one quick idea. An investor would likely have better ideas.

[AndrewM]

When you rent, you are not gaining equity. When you are paying into a mortgage, you are.

Does anyone know where rent is less than what the mortgage is worth? Last time I checked landlords aren't interested in charging less rent than what they are paying on the mortgage / property tax.

If you need to spend $10,000 on CMHC, housing prices are dropping, and you plan on moving in a few years, it absolutely makes sense to rent.

[Capt. awesome]

1) Don't take out the maximum mortgage you can. Life will happen. Rainy days will come. Things will break down. You want to be able to have a few bucks to live.

2) Get an inspection unless it is brand new.

Best of luck!

I have to disagree with the second point. I bought brand new and still had an inspection done. Found a few things wrong with the house and made sure it was fixed before signing. While its nice to get a new house its always good to make sure its up to par before saying yes.

First off, congratulations. Being a homeowner is awesome but buying a house was the most stressful thing I've ever done. Things I wish I'd listened to more include:

*Try to stick to your budget, but understand that what is truly expensive is buying alot of homes. If you find one you really love (more on that below) get it, you'll end up buying it at some point.

*Understand what you are and are not buying. A brand new house always looks shinier, but fences, decks, and landscaping add up quick.

*Make an inspection a condition, even if its new. You'd be surprised.

*Don't sign on for just the lowest rates you can with mortgage broker, understand the fine print like double up payments, lump sums etc. Those make a difference sometimes.

*Don't rush - they're making and selling these every day.

I never had a any of those things and I have to agree that they do add up. Could of had a deck added on to the house but it was only going to be a 10x10 and I wanted a deck I could relax on not just something to barely big enough for a table and bbq. Some builders will leave the landscaping up to you and give you a rebate once its complete.

[Suzukisam]

Make sure place to park quad. And a place to hang your deer and moose which is the #1 thing on your list to look for. After all this is a hunting forum so you must hunt

[Newview01]

If you need to spend $10,000 on CMHC, housing prices are dropping, and you plan on moving in a few years, it absolutely makes sense to rent.

Are housing prices dropping? What is the 5-10 year forecast?

I wouldn't hesitate to buy even with paying CMHC and knowing I have to move in 3 years.

You are paying:
$55k ish to rent and have nothing
$50k ish to own (including CMHC fee) and if you sell you will walk away with money in your pocket (unless there is a serious market crash in AB, unlikely)

You will also walk away with stronger credit, you can develop a history with a bank, the benefits are huge.

Renting is good if you are a drifter, or if you are saving for a down-payment.

[kingrat]

Use the first time home buyers program, go accelerated by weekly payments on mortgage and don't forget about extra costs like insurance, lawyer fees etc. What I did was bought 10000 in rrsp then used my tax rebate I got back plus the 10000 in rrsp as my down payment.

[wildwoods]

Please don't use hearsay on an Internet forum to help you make decisions. Go look at the stats yourself. Average housing prices are up, although marginally in Edmonton over the last year as well as sales numbers.
I find it comical people who champion renting over owning. As long as you keep a good debt ratio you will never lose in a market like Edmonton. Even the disaster of 2008 has seen recovery of prices to those levels and beyond. Yes that's nine years ago but again, holding long-term you haven't lost. And that was an outrageous market with a crazy spike that people were buying at the top of the peak.
Is home ownership the best investment out there? Absolutely not. However it is a tangible asset that once paid for, you own and nobody can take it away. There are plenty of opportunities to buy well in this market.
Real estate is part of anyone's good, diverse portfolio. If you bought in 2004 and sold in 2007, chances are your investment made more money per hour than you did. And I'm not talking about principal residence. It's my firm belief that you don't make money in real estate until you own secondary and or multiple pieces.
My renters are currently earning me money three different ways: Monthly payment, market appreciation, and paying off my mortgage. You need a place to live so why on earth would you rent when you can own an appreciating asset?
And live below your means. I like that suggestion from previous posters. Always plan for a rainy day. Try to pay your mortgage off as quickly as you can with higher principal payments per month if you could afford it. My $.02. Happy home owning

[Big Grey Wolf]

I would not count on houses getting cheaper in Alberta with $64 West Texas and $70 Brent crude (Real World Oil Price). Homes in Alberta follow the price of oil.

[coastalhunter]

Go low. It's a headache free life. Off the top of
My head; I was approved for around 600k, purchased for 220k, put 25% down since its agricultural, financed 165k.

Wife works a 'till retirement' position with local ems, sure nice knowing with only one income everything is paid for. (I'm self employed & oilpatch so you never know)

[ryeguy21]

the smaller the town the harder it is to sell afterwards. Just something to keep in mind for when life gets in the way.

[leeelmer]

Buying vrs renting.
Buying you have options, you can change and do things as you would like.
But have to sell if you change jobs and want to move.
All break downs and maintence is on your dime.
If you do the math, and don't care about moving a wall or do this or that to the house, in the long term(20-30 years) it is cheeper to rent.
Yes I know you guys will tell me I am crazy but it is true.
20-30 years of house ownership has alot of costs.
New roof
new kitchen,
new appliences
new plumbing(some cases)
new flooring
new furnace
new hotwater
new septic
Cost of your loan over the course of time, this can add up to 10s of thousands of dollars.
Now you sell and it looks like you made a pile of cash? right?
Well sometimes, but if you add all the costs of repairs, costs of ownership, costs of lawyers, and real estate agents. Well did you make any profit?
That up to you to decide but in a lot of cases the answer is no.
Now would I ever rent? No because I like to do as I see fit and that is a lot of us. But don't get caught up in the I am making money on buying a house. Because in a lot of cases, this is pain not true. But there are alot of plus parts to owing your own home.;

[Sledin]

Guys will disagree.
But go with the variable rate mortgage, it saves you money. Historically it's always been the better option.
Banks aren't stupid and hate risk so look at the fixed rate, if you can make that payment go variable, even set your payment to that amount and pay down your mortgage faster.

Now let the naysayers say Nay!


Sent from my iPhone using Tapatalk

[Rastus]

The "ONLY" advice that I can give is "GET IT PAID FOR" because when you walk into a bank and claim that you own a $300,000.00 house and it is paid for! man those bankers will kiss your a__, well, you know what I mean. Not only that, you will save money on the interest, but it is up to you. If you invest the money and live off the interest, come retirement time you will have a whatever mortagae or rent on a home that you do not own. And remember if the interest rates go down or up your investments go down or up. But it is your call. You cain't live on, well what if.

[Newview01]

Buying vrs renting.
Buying you have options, you can change and do things as you would like.
But have to sell if you change jobs and want to move.
All break downs and maintence is on your dime.
If you do the math, and don't care about moving a wall or do this or that to the house, in the long term(20-30 years) it is cheeper to rent.
Yes I know you guys will tell me I am crazy but it is true.
20-30 years of house ownership has alot of costs.
New roof
new kitchen,
new appliences
new plumbing(some cases)
new flooring
new furnace
new hotwater
new septic
Cost of your loan over the course of time, this can add up to 10s of thousands of dollars.
Now you sell and it looks like you made a pile of cash? right?
Well sometimes, but if you add all the costs of repairs, costs of ownership, costs of lawyers, and real estate agents. Well did you make any profit?
That up to you to decide but in a lot of cases the answer is no.
Now would I ever rent? No because I like to do as I see fit and that is a lot of us. But don't get caught up in the I am making money on buying a house. Because in a lot of cases, this is pain not true. But there are alot of plus parts to owing your own home.;

You are wrong. You will have a house to sell in 30 years if you own. You will have nothing in 30 years if you rent. As said before, rent is more $ than a mortgage payment.

[wildwoods]

Buying vrs renting.
Buying you have options, you can change and do things as you would like.
But have to sell if you change jobs and want to move.
All break downs and maintence is on your dime.
If you do the math, and don't care about moving a wall or do this or that to the house, in the long term(20-30 years) it is cheeper to rent.
Yes I know you guys will tell me I am crazy but it is true.
20-30 years of house ownership has alot of costs.
New roof
new kitchen,
new appliences
new plumbing(some cases)
new flooring
new furnace
new hotwater
new septic
Cost of your loan over the course of time, this can add up to 10s of thousands of dollars.
Now you sell and it looks like you made a pile of cash? right?
Well sometimes, but if you add all the costs of repairs, costs of ownership, costs of lawyers, and real estate agents. Well did you make any profit?
That up to you to decide but in a lot of cases the answer is no.
Now would I ever rent? No because I like to do as I see fit and that is a lot of us. But don't get caught up in the I am making money on buying a house. Because in a lot of cases, this is pain not true. But there are alot of plus parts to owing your own home.;
The last 50+ years the house prices have doubled on average every nine years. If you held for 30 years that would mean you over triple. There's no way you put that much into your home in repairs. If you do, you have beyond a lemon of a house.
There is also no way it's cheaper to rent over 30 years. Rent is an endless pit with zero return. Again buying is not the best investment in the world. There's many that will pay more ROI. However: This is your castle! when home base is paid for and you never have to worry about losing it. If you don't buy beyond your means that is. And when you are dead and gone your kids will reap the benefits of you making good choices by inheriting a valuable asset.
Renting is always more expensive than buying except for a small small percentage of cases.

[Ken07AOVette]

After 17 years for me...
New roof - shingles only will do in 2018
new kitchen- nope
new appliances - went to gas, fridge is 5
new plumbing-nope
new flooring-nope
new furnace-yes went higher eff and a/c
new hotwater- yes at 12 years
new septic-nope on city

[leeelmer]

After 17 years for me...
New roof - shingles only will do in 2018
new kitchen- nope
new appliances - went to gas, fridge is 5
new plumbing-nope
new flooring-nope
new furnace-yes went higher eff and a/c
new hotwater- yes at 12 years
new septic-nope on city

And this is quite true Ken,
But sometimes it is true, and a guy has to be prepared for it is all I am saying,
Costs of home ownership needs to be factored into the equation.
And sometimes people don't look at this as a cost.

[fishtank]

When you rent, you are not gaining equity. When you are paying into a mortgage, you are.

Does anyone know where rent is less than what the mortgage is worth? Last time I checked landlords aren't interested in charging less rent than what they are paying on the mortgage / property tax.
sorry i have misunderstood ,i was thinking of some one buying a overprice house and taking on a huge mortgage, and paying a big mortgage payment every month. what i was thinking when i posted that buying a $500k house with $150k to drop on a house down payment and carry a $350k mortgage( also base on the assume low interest it would be a 25 year average 3-5%) and the fees that come with home ownership, i would have rent and invest the $150k with a return of 3-15% and i probably would be ahead down the road .
what coastalhunter post
Go low. It's a headache free life. Off the top of
My head; I was approved for around 600k, purchased for 220k, put 25% down since its agricultural, financed 165k.

Wife works a 'till retirement' position with local ems, sure nice knowing with only one income everything is paid for. (I'm self employed & oilpatch so you never know)

then absolutely owning is the way to go:)

[Trochu]

Generally, landlords aren't registered as a charity and losing money.

[Ken07AOVette]

And this is quite true Ken,
But sometimes it is true, and a guy has to be prepared for it is all I am saying,
Costs of home ownership needs to be factored into the equation.
And sometimes people don't look at this as a cost.

There are other giant costs too.
If you have a high maintenance wife you might pay for a complete reno every few years. :budo:
I will pay roughly $50,000 in insurance in 20 years. It is a good thing that homes keep their value, or that would be a truly ugly number.
I have only ever had 1 claim, a few years ago when the town was backflushing the sewer. While my backwater valve stopped everyone else's burritos from coming into the basement, when my daughter drained the bathtub a bunch of ours were on the basement carpet. :angry3::sign0176:
That cost them just under $40,000.00. I was truly glad to have paid that year.

[223MB]

All this feedback is amazing guys, I appreciate it. Some very knowledgeable people on here.

[DiabeticKripple]

I’m going with the RRSP route for first time home buyers and using money that I have in company stocks and my TFSA.

[Big Grey Wolf]

Lets see, my first house cost $20,000 to buy, now worth $400,000. I guess it is better to rent and have a pile of receipts for your retirement years.

[AndrewM]

Most of the time it is better to buy than rent but not all the time. To generalize all areas the same and say buy would be a mistake.
My biggest piece of advice is don’t stretch yourself too thin. Buy what you can afford and you can always upgrade later.
Always be careful with girlfriends or future ex wife’s as you don’t want someone automatically getting half your house as matrimonial property when they didn’t contribute a penny.

[leeelmer]

Lets see, my first house cost $20,000 to buy, now worth $400,000. I guess it is better to rent and have a pile of receipts for your retirement years.

Yes yes. But its not 1972 now its 2018
And houses cost 100s of thousands of dollars
Do you really think the average house in lets say Red Deer today is on the market for $372000.00 is going to be worth millions is 20 years?
No it certainly is not. Those days are gone. We are talking about buying a house now not years ago. Big difference

[MyAlberta]

When you rent, you are not gaining equity. When you are paying into a mortgage, you are.

Does anyone know where rent is less than what the mortgage is worth? Last time I checked landlords aren't interested in charging less rent than what they are paying on the mortgage / property tax.

Not sure about the rural market, but there are plenty in the urban market. A flood of ‘investors’ who jumped into rental are now scrambling to acquire tenancy to stop the bleed. Commercial is hurting even more.

[reddeerguy2015]

Always be careful with girlfriends or future ex wife’s as you don’t want someone automatically getting half your house as matrimonial property when they didn’t contribute a penny.

Maybe the most solid piece of advice in this thread...:sHa_sarcasticlol:

[MyAlberta]

maybe the most solid piece of advice in this thread...:sha_sarcasticlol:

mgtow

[hogie]

Yes yes. But its not 1972 now its 2018
And houses cost 100s of thousands of dollars
Do you really think the average house in lets say Red Deer today is on the market for $372000.00 is going to be worth millions is 20 years?
No it certainly is not. Those days are gone. We are talking about buying a house now not years ago. Big difference

Maybe maybe not. Who would have believed a fully loaded truck could be pushing $100000 to purchase ? If you told somebody that 20 years ago they would have laughed at you. What is that truck worth 20 years from now?

I don't think (hope)we will see the crazy jumps in short periods like happened. I also don't think prices will change too much unless something major happens, if that happens won't matter if you rent or buy. The economy still isn't great and prices didn't drop in half, lost some but you would have that loss paying rent. People really don't like taking a loss unless they have to. When we sold in Camrose the appraiser had essentially the same house, he bought when everything has at it's peak, dropped about $30000 since he bought it a few years before. Not taking a loss and staying there .

My wife has moved many times for her job since 2002, we met in 2009. She was lucky that made money on every house. I made on my house that I had. We have done our last move as we are in an area where we want to be. We did take a loss on our last house due to the economy. Only there for 2.5 years and would have basically paid rent on it for what we lost. Had we stayed longer chances are would have broke even or made.

[HyperMOA]

Yes yes. But its not 1972 now its 2018
And houses cost 100s of thousands of dollars
Do you really think the average house in lets say Red Deer today is on the market for $372000.00 is going to be worth millions is 20 years?
No it certainly is not. Those days are gone. We are talking about buying a house now not years ago. Big difference

You are comparing 46 years not 20. Yes I do believe that a $372,000 house in Red Deer will be worth a million dollars in 2064. Barring nuclear war, or worse 45 years of NDP I believe it will. :)

When people built in the 70's for $20,000, people were shaking their heads at the poor decisions made by their children. A house in 1949 was only $3100. (random number)

[HyperMOA]

I’m going with the RRSP route for first time home buyers and using money that I have in company stocks and my TFSA.

Convert those stocks and TFSA into RRSP's first. Cash in on the tax refund now.

[223MB]

Convert those stocks and TFSA into RRSP's first. Cash in on the tax refund now.

Lets say I buy $20,000 worth of RRSP, what kind of refund am I looking at on average.? I currently have my money in a Tfsa and stocks. My plan was to just cash those out and put the cash for the down payment.

[Scott h]

Hardly. The best way to 'gain equity' is to save your money and invest it so that YOU are getting paid interest, instead of paying out blood money on interest and overpriced accomodation at peak prices. Housing which will need a bulldozer by the time it's paid off (if ever).

Then you are stuck paying hundreds of thousands of dollars interest to the bank on top of massively overpriced RE, spiked by artificially low interest rates. Don't you read the financial press at all?

Cheap interest and inflated money chases up capital prices, leaving you holding the bag when interest rates swing back up again to normal. Same as bond prices.

I see what you are eluding to but you forgot to add in the money that you would be paying to have a place to live. Buying may not always be the smartest move, but you do have to add in all the numbers.

[ryeguy21]

Lets say I buy $20,000 worth of RRSP, what kind of refund am I looking at on average.? I currently have my money in a Tfsa and stocks. My plan was to just cash those out and put the cash for the down payment.


depends on your tax bracket but a safe estimate is a 30% refund.

[srs123]

Buy a home that you can pay off the mortgage off on one income. It is less stressful if you or ur partner lose their job.
Figure out if the place will serve you for at least 5 years. Statistics show that 66% of first time home owners move within the first 3 years. And lose a bit of money on realtor fees.

Buy in an established neighborhood new or old doesn't matter.

Get a home inspection done

When you put out ur offer, put a stipulation there that 5000 will be held back from the purchase price until 3 days after moving in case the previous owners change something or scratch something. I just had this work for me a few months ago when we bought our place. The previous owners hired a moving company and the scratched the hardwood floors while dragging a dinning table to the door. So we clawed back 3000 to fix it.

Shop for rates, higher a mortgage broker if u are too busy.

Ask for second and third showings if u want and write everything down and take photos for comparison once u receive home, it will make it easier to remember which house had what

[223MB]

Buy a home that you can pay off the mortgage off on one income. It is less stressful if you or ur partner lose their job.
Figure out if the place will serve you for at least 5 years. Statistics show that 66% of first time home owners move within the first 3 years. And lose a bit of money on realtor fees.

Buy in an established neighborhood new or old doesn't matter.

Get a home inspection done

When you put out ur offer, put a stipulation there that 5000 will be held back from the purchase price until 3 days after moving in case the previous owners change something or scratch something. I just had this work for me a few months ago when we bought our place. The previous owners hired a moving company and the scratched the hardwood floors while dragging a dinning table to the door. So we clawed back 3000 to fix it.

Shop for rates, higher a mortgage broker if u are too busy.

Ask for second and third showings if u want and write everything down and take photos for comparison once u receive home, it will make it easier to remember which house had what

Our plan was to buy one home and stay there. Everyone tells us to buy something small and cheap, then upgrade in 5 years. Why not just do it once and get it over with.

[srs123]

Our plan was to buy one home and stay there. Everyone tells us to buy something small and cheap, then upgrade in 5 years. Why not just do it once and get it over with.

I agree with you, if u can do it now and wont break the bank , then save ur self the hastle and the realtor fees in 5 years when you sell the place to upgrade.

[HyperMOA]

Lets say I buy $20,000 worth of RRSP, what kind of refund am I looking at on average.? I currently have my money in a Tfsa and stocks. My plan was to just cash those out and put the cash for the down payment.

As Ryeguy pointed out 30% is a safe figure. Depending on your income it can be higher too. Just throwing out realistic numbers, on $20,000 you would receive $6-8000 back from your taxes. Which will buy furniture, appliances, upgrades or repairs. Better yet, get that TFSA working for you again, and compounding for the next 40 years.

[HyperMOA]

If you're not interested in buying again in a few years go look at lots of homes and show-homes and make sure you know what you want. Also buy a bit bigger than you think you need. IT may be just you and the wife now; even if its not on the radar, it could be you, the wife, 2 kids, a dog , and your mother-in-law in 5 years from now.

As Garth Brooks says, "Ask me how I know."

[JWCalgary]

Mortgage broker. Bi weekly. Variable.

Sent from my SM-G530W using Tapatalk

[DiabeticKripple]

Wouldn’t a weekly payment help pay down the mortgage faster as the interest compounds on a lesser amount?

[223MB]

thabks again everyone for the valuable information.

[Ken07AOVette]

There are other giant costs too.
If you have a high maintenance wife you might pay for a complete reno every few years. :budo:
I will pay roughly $50,000 in insurance in 20 years. It is a good thing that homes keep their value, or that would be a truly ugly number.
I have only ever had 1 claim, a few years ago when the town was backflushing the sewer. While my backwater valve stopped everyone else's burritos from coming into the basement, when my daughter drained the bathtub a bunch of ours were on the basement carpet. :angry3::sign0176:
That cost them just under $40,000.00. I was truly glad to have paid that year.

Forgot to mention taxes. In 20 years i will have paid nearly $100,000 in property tax on my home. In a town of 180 people. With no store, gas station police or hospital...

[bigbuck]

Take into account all the expenses

Lawyer $1200
Inspection $300-$400
Property tax $2000-$3000/yr on average
House insurance $1000-1500/yr

A good idea is to make a realistic budget of all your expenses on a monthly bases compared to your income. Make sure there is some room in there to continue to invest in RRSP/TFSA. Furniture is also a big expense, couches, bed set, kitchen table etc can an really add up quick.

Don't be scared to lowball the asking price. The worst that can happen is they so no.

Good luck!

[Rockman]

Wouldn’t a weekly payment help pay down the mortgage faster as the interest compounds on a lesser amount?

It does help you pay faster, but that's mostly because more payments are made in a given time period. A very tiny amount is saved in your having made a payment 1 week earlier (weekly vs biweekly), or 3 weeks early.

[bdub]

Budget for significantly higher mortgage rates looking out in the future. It's very possible we may never see rates as low as we have had in the recent past. That would be my biggest worry about carrying a mortgage right now. Work hard at paying it of asap and don't overspend.

[rokman]

We bought last spring in Calgary. Signed on for a 20 year variable rate. Rates rose 3 times in the last year (or was it 4... with the recent hike last week...) so we locked in before this last rate hike. 5 year fixed rate for 3.19%. Bi-weekly accelerated payments. A couple months of the year will have 3 payments.

If you're not extremely handy, buy something that is move-in ready.
If you're quite handy and have experience in framing, drywalling, plumbing, electrical etc, then buying a bit of a fixer-upper is a good alternative.

Get as much money put together as you can WHILE STILL having a nice cushion left over for regular living expenses and normal life expenses. We put 12% down on our house. IF we would've put 20% down, we would've saved $10,000 on CMHC fees sure, but we may not have even been able to afford KD and O'douls. lol

Good luck.

[Digger1]

Having owned 5 other houses, we're now finally on a mini farm with a highly efficient cozy little house, I'd say read Dave Ramsey's books. He will permanently warp your mind about living within our means and paying off stuff quickly. Stay reasonable, keep a margin. Best wishes!

[Big Sky]

Nephew moved to Calgary in the fall and they were looking for a new house. They asked us to help look at the houses. There's a lot to consider when house shopping so extra 'eyes' can be a big help. Here's a few thoughts from their process.

DIY work may or not be an issue. No permits for electrical work is not a good sign. Some places had DIY work that I wouldn't give a nickle for.

Also saw some real nice DIY work. One place where they did a DIY kitchen reno. The owner did some work and they brought in trades for some. The owner had a binder showing all of the steps of the reno so that people could see the work that was done. I really liked this. Being able to see what's behind the fancy backsplash is reassuring.

For sure, check out the neighborhood. Being able to see the comings and goings of the neighbors is good. They rejected one place because of the neighbors, two doors down.

Local police may have a crime map. Check it out.

[DiabeticKripple]

Well I cashed in my company stocks.

I went to the bank to deposit the cheque, and while I was there I figured I’d see what I can get pre approved for. I was preapproved for the amount I wanted (400k purchase, 80k down for a 320k mortgage) at 3.49% 5 year fixed, closed. I’m still unsure of what kind of mortgage I want, but I’ll be purchasing after this pre approval expires so the mortgage type isn’t set in stone.

Now I’m going to take that cheque since it was all pre-tax income and split it between me and my GF’s RRSP’s so that the gubbermint cant get their paws on it and then we will use that as half of the down payment.

[Sporty]

Keep in mind when using RRSP's as a down payment for first time home buying, you have a certain amount of years to pay that back or they'll want to tax you on it

[Glion]

Include a cover letter in your offer. Not a sob story but just a letter telling who you are etc. People are more willing to negotiate if you do.(generally)

[Fish along]

Completely depends on your financial situation...if you got a few bucks buy a fixer upper or a rental place in which you can life in and rent out a space helping cut over all costs and the fixer upper is a no brainer, location, potential to turn over with a little elbow grease and then sell, move into another type property and repeat. I guarantee well under 20 years you will be mortgage free in a house that you completely enjoy and then put that would have been mortgage payment away into a plan for retirement, emergency funds and ihhhh yeah trips and a few toys....not hard to do. Break it down into 5 year plans, stay the course and you would be surprised how time fly's by and you own everything and then some....
X2 ,this is solid advice, look for something you can make noticeable changes,that will enhance its worth, property size also important, sometimes people buy because it's a nice yard.

[schreyer]

Keep in mind when using RRSP's as a down payment for first time home buying, you have a certain amount of years to pay that back or they'll want to tax you on it

15 years I think is the time frame?

[raab]

Dont unless you like Home Depot and spending all your money on a house.

[jstubbs]

I would say that if you have any chance that you might move within ~3 years or purchasing, don't bother buying and rent.

Lets say you buy a house for $450k, put $100k down (smart too, as you don't pay mortgage insurance with your conventional, non-high ratio mortgage), so you have a $350k mortgage and do some math.

On a $350k, 3.5% APR, 25 year amort, 5 year term mortgage, in 36 months you'll have paid $35k in pure interest and only $27k of your principle paid off. Everyone loves to say renting is throwing money out the window, but on that mortgage you just paid $62k to acquire $27k in equity. Then when you go to sell, you pay 7% on the first $100,000 of the sale, and 3% on the remaining for realtor fees only. Lets say the market has been realistic and your house three years later sells for $500k.

You still owe roughly $323,000 on the mortgage, so you receive $137,000 in proceeds from the sale before any other fees. Realtor fees are typically 7% on first $100k and 3% on the rest, so that equates to $16,000 out of your pocket. Then legal, moving, etc expenses add up to easily another $2500 out of that. Then factor in the $35,000 you paid in interest, and your $100,000 downpayment.

$137,000
-$100,000
-$35,000
-$16,000
-$2500
Final total: -$16,500 loss. This doesn't even include the other costs associated with purchasing the house in the first place. Nor does it entail the opportunity cost of investing that $100,000 downpayment for three years and the capital gains associated with that make the buy vs rent decision even more of a no-brainer. Or had there not been a 20% downpayment, mortgage insurance on a $350,000 mortgage would have been roughly another $13,000 or so.

Owning isn't the end-all choice. Renting provides mobility and more freedom. Long term, owning a house is certainly a better option, but don't tie yourself down with one. It'll be nothing but a headache and a financial burden.