Back to Home PageWelcome Guest! Register | Login | Home | Contact Us | Site Map | Advertise | FAQ | Search
Canadian Desi
    Articles


        
   Home   Submit Your Article   Success Stories   Search

Similar Articles

Buying a Home: What You Can Afford
If you're thinking of purchasing your first home, you probably have a lot of great ideas about what you'd like - such as several thousand square feet ..
General Requirements to Qualify for Homeowner Mortgage Lo
The home is located in Canada. you have a down payment of at least 5% of the purchase price of the dwelling, depending on the dwelling type. Single..
How much will the house really cost me?
How Much will it Really Cost? Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need t..
What is CMHC Mortgage Loan Insurance?
CMHCs Mortgage Loan Insurance is an insurance that covers your lenders risks associated with financial loss that can occur when a homeowner defaults..
How to save for a down payment
Owning your own home has a lot of payoffs, especially these days when mortgage rates are still among the lowest in 30 years. There are also many housi..
Mortgage Basics
On 10th January, 2004 on a very cold Saturday afternoon a group of 25-30 Canadian Desis met in Toronto for the first ever meeting of Canadian Desi.co..
Buying Real Estate
When it comes to buying Real Estate, proper preparation is one of the keys to success. Don't want to find yourself in a neighborhood you dislike..
MORTGAGE 101
Mortgage 101 The purchase of a home is one of the biggest decisions and significant financial investments a consumer makes. It is extremely im..
First Time Home Buyer Information
Making the right choice when it comes to purchasing a home is a matter of good planning, not good luck. No one person can be expected to know everythi..
Mortgage Challenges What Canadian Market Faces TODAY!
Enclosed please find a "brief synopsis" of mortgage challenges what Canadian Market is suffering these days in various market segments. Self-employ..
Mortgage plain talk - Difference between 'amortization' and 'term'
There are many stresses associated with home buying both financial and emotional. And frankly speaking, it doesnt help that the process comes with ..
Mortgage matters
Some simple hints for Home ownerships for Self Employed, Commissioned Sales Person, Seasonal Employees and Regular Incomes. Self-employed With unp..
Canadians' Investment Dilemma: The Mortgage Or The RRSP?
It's not hard to figure out where Canadians are spending their investment money these days. Real estate sales have hit record levels for several year..
Understanding your credit
Incurring debt is part of life for most people. Understanding how best to handle credit will help you maintain control of your overall financial situa..
Most Common Mistakes
Most Common Mistakes People Make Regarding Life Insurance Life insurance protects against the risk that an insured person will die too soon and be ..
Articles Groups
  • Canadian Immigration & Citizenship
  • My Experiences with Canada
  • About Canada
  • Tips for job findings
  • Housing and Mortgages
  • Money Matters
  • Tips for newcomers to Canada
  • RESP & Insurances
  • Education in Canada
  • Miscellaneous
  • Buying a Home: What You Can Afford


    By pauljhand




    Buying a Home: What You Can Afford
    If you're thinking of purchasing your first home, you probably have a lot of great ideas about what you'd like - such as several thousand square feet of living space, a two-car garage, large fenced-in lot, one or two fireplaces and a panoramic view. But it may be time for a reality check.
    Most first-time buyers want their dream home right away. However, that dream home likely sells for several hundred thousand dollars and the down payment is more than you earn in two years. Not to mention the mortgage payments - which are three times your monthly take-home salary!
    The best way to deal with this reality is to match your financial capabilities with the home that meets as many of your needs as possible.
    Many first-time buyers purchase what is commonly known as a "starter home." There's nothing wrong with this approach. In fact, it's good common sense to avoid buying a home that will stretch your budget to its breaking point. Remember, the starter home is just that - a way to get started in long-term real estate investment.
    To see how much you can afford, you should take a close look at your financial situation. The vast majority of home buyers lack the funds required to buy a home without assistance from a bank or other financial institution (commonly called a "lender"). So, for most of us, buying our first home means combining our savings with money borrowed through a special type of borrowing arrangement called a "mortgage."
    Borrowing to purchase is not only acceptable, it's desirable. Even people buying millions of dollars' worth of real estate borrow to make the purchase
    There are two types of costs in buying a home:
    the amount of money you'll need for the initial purchase; this consists mainly of the down payment and other costs such as legal fees and taxes; and
    the ongoing costs of paying back your mortgage, along with monthly operating costs for utilities, maintenance, insurance and annual property taxes.

    Costs of buying a home =
    * Down payment & * Mortgage
    * Legal fees
    * Utilities
    * Inspection fees
    * Maintenance
    * Taxes
    * Insurance
    * Property taxes
    When lenders assess your ability to buy, they look at your ability to pay both types of costs in determining how much money they will lend you. Before you ever visit a lender, you can predetermine this amount, using the same formulas they do.
    Lenders use several factors in judging your ability to handle a mortgage, including your income, employment record and credit worthiness. However, one way you can estimate the price range you can afford is to look at the amount of money you have available for a down payment.
    The most common mortgage is a "conventional mortgage." In this type of arrangement, lenders will loan up to 75 per cent of the "appraised" value (estimated market value) of the property or the purchase price - whichever is lower. The remaining 25 per cent is the amount you will contribute as down payment.
    If you want to buy a home that has an appraised value of $200,000, a lender may loan you 75 per cent or $150,000 on a conventional mortgage when you contribute a down payment of $50,000.
    If you plan to borrow funds through a conventional mortgage, multiply the money you have available for a down payment by four. For example, if you have access to $40,000, you may be able to purchase a home with an appraised value of $160,000 ($40,000 x 4 = $160,000).
    This assumes, of course, that you have sufficient income to make the payments on a $120,000 mortgage (75 per cent of $160,000). Most lenders will not permit a borrower to take on a debt load the borrower can't carry. That's why reputable lenders "qualify" potential borrowers before issuing mortgages.
    Most lenders say that your monthly housing expenses (mortgage payment and taxes), plus condominium maintenance fee, if applicable, would not exceed 30 per cent of your monthly gross family income.
    This is called your Gross Debt Service (GDS) ratio. Some lenders will go as high as 35 per cent, depending upon a number of variables.
    Lenders also use a second calculation in qualifying you for a mortgage. It's called the Total Debt Service (TDS) ratio. Generally speaking, no more than 40 per cent of your gross family income may be used when calculating the amount you can afford to pay for mortgage payments and taxes plus other fixed monthly expenses.
    These other fixed costs are your ongoing commitments and can include auto, student or personal loans, as well as revolving charge accounts. Again, the 40 per cent calculation may vary slightly among lenders.
    By knowing exactly what you can afford, you can make your home purchase with confidence.source:OREA
    posted by - SUKHPAL SINGH
    For more info click http://www.sukhpaul.blogspot.com" rel="nofollow">LINK


     


    Discuss this article

    Article Rating is 10.0000 (Excellent).
    Rated by: 2 voters.
    How do you find this article?
    Excellent Good Average Poor Very Poor

    You can also Submit an Article and help other community members. Thanks.



     
    Web
    CanadianDesi
    Please Contribute!
    Write an Article
    Send Community News
    Create Photo and Video Albums
    Submit Good Pictures
    List Useful Websites
    Post Jobs
    Submit Events
    List for FREE!
    Businesses
    Classifieds
    Social Organizations
    Religious Places
    Employment Agencies
    Email Page
    Your Email
    Friend\'s Email

    Advertise Contact Us Privacy Policy and Terms of Usage FAQ
    Canadian Desi
    © 2001 Marg eSolutions


    Site designed, developed and maintained by Marg eSolutions Inc.
    //-->