Oakville Real Estate News

Understanding Your New Home Finances

Blog by Joette Fielding | April 12th, 2016

Canadian 100 dollar bills.jpgBuying a new home or condo is a major life step, and for most people, it is the largest single financial investment they will ever make. If you are looking to buy this year, examine your decision carefully – especially where the deposit is concerned. Figure out how much you really have – and that depends a lot on when in the marketing process you purchase. If you buy early in the pre-construction phase, you have the advantage of better pricing and more time to save toward your deposit and closing costs. In fact, you may have months, or even years. This can make a big difference, especially for first-time buyers. Be realistic about what you can afford. Ask if your builder is offering any deposit programs that make it easier to buy.

Next, ask all the questions you can about what the home or condo will actually cost you. The sales representative you deal with will have the information you need to prepare adequately. Consider your purchase in the big picture and explore all avenues. For example, first-time buyers can withdraw up to $25,000 from their RRSP to buy or build a qualifying home. This is a huge help and a wise use of your money, as real estate continues to be a good investment where the future is concerned.

Remember, too, that there are closing costs. In addition to asking your builder representative about these, be sure to have your Agreement of Purchase and Sale examined by a real estate lawyer. According to Canada Mortgage and Housing Corp. (CMHC), your closing costs can range from 1.5 up to four per cent of the purchase price, so you must be prepared to pay these. The costs include items such as the fee for Tarion Warranty Corp. enrolment, realty taxes and legal fees.

Again, make the most of the period between buying your new home and your closing date. Take this time to save money and get your finances sorted out for your new life. Focus on a specific goal for move-in and work toward that dollar amount. Some first-time buyers even set aside the condo maintenance fee every month to work it into their budget, and then use that amount toward the rest of their downpayment.

Shop for a home with the motto, “Be prepared.” Use every resource at your disposal, including CMHC’s guide, “Homebuying Step by Step.” The Canadian Home Builders’ Association also offers information on buying a new home, on how much can you afford and on the full cost of your purchase.

Once you factor in all your costs, you may discover that the home you like is beyond what you can afford. Better to find out up front rather than later on. Keep an open mind and check out the other designs available. Today’s compact layouts “live” much larger than they did decades ago. It may be that a smaller space can still fulfill your needs beautifully. If you are a first-time buyer, your main goal should be to get into the market and start building equity.

Traditionally, real estate increases in value every year – especially in the Greater Toronto Area. The entire world is looking at the GTA as a fabulous place to live and invest in. Often, owners who purchased early have already seen their investment rise in value by the time they move in. If you are buying a new home or condo, pat yourself on the back for making a great decision that will launch you into the future in an exciting way. Just be sure to find out exactly what it will cost you, and plan accordingly.

Content courtesy of http://www. http://nexthome.yp.ca/


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