Just think, renting a three bedroom freehold townhouse for $1000.00 per month, or owning that same townhouse inclusive of taxes for $1100. per month(1). Who would rent?
I believe most people have the ambition to own a home sooner or later. Imagine being able to do it this early in life. With the rates this low, can you afford to squander this opportunity?
Ah yes, the topic of downpayment just came back to haunt our dreams, didn't it? Let's take one minute to discuss those horrible two little words....down payment.
Instead of blowing a bundle on Xmas again this year, why not advise everybody concerned that this is a lean year because house buying plans are in the offing. They will understand! Buy yourselves a home for Christmas! The system says you only need 5% of the purchase price in cash, the rest you can mortgage. If you are short, bundle up the baby, call Mom & Dad, Sister or Brother( the ones with the most money is advantageous) set up a convenient time for a visit. Sooner rather than later is wise (before you lose the initiative), make up your mind that someone is going to help you buy that house. Swallow your silly pride (grovel if you must), and don't leave that house until you have a commitment for the cash necessary to buy your home. Now remember, according to present day rules "of engagement" (old war saying), a direct family member may give you the money necessary for the down payment. This family member must also give you a letter to that effect, and you must retain a copy of the gift cheque. This gift must have no strings attached!?! If my Father was making $250.00 interest yearly on the $5,000. he just "gave" me that enabled me to buy my home, I just might want to "give" him $250.00 per year for his birthday, Christmas, Father's Day etc. Wouldn't you?
You may also use your RRSP to accent your down payment, as long as the RRSP's Trustee has invested it into a vehicle that can be cashed. If you have an asset with true worth (a car, boat, lot, term deposit, bonds, promissory note(2)), you are allowed to borrow against such an asset. You must of course disclose the payment of this loan in your debt servicing information.
Along with the down payment, there are also closing costs discussed in a previous issue of the Sun. Don't forget though that most of you have already paid your last month's rent where you are living, and you first mortgage payment won't happen until one month after you move in.(3) That, along with you purchasing an OHOSP (Ontario Home Ownership Savings Plan), should enable you to just about cover closing costs.
With the pressure on the American Dollar, I can't see these rates staying around too much longer, don't dilly dally, find the down payment, find a "pre-approved" mortgage, find a Realtor/Builder, and find the financial security of owning your own HOME.
1. example based on purchase price of $128,000 with minimum down payment of 5%.
3. unless you choose to make your payments weekly or bi-weekly