# Home Purchase



## jmscole111 (Feb 16, 2011)

I am planning to buy a home by the end of this year. I hope by the time my financial situation will be fair enough to afford this. But will mortgages will be a help? What if i fail to do arrange fund in proper time?


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## I'm Howard (Oct 13, 2010)

Mortgage Broker, ask them to do the leg work, won't cost you anything.


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## NotMe (Jan 10, 2011)

Your offer should be dependent on financing so you can back out of the deal if your financing falls through.

On a side note, and I'm not trying to get preachy but home buying and home ownership are very different animals. If you have doubts about affordability, I think you really have to take a close look at why it's so important to you. Home buying has tons of one-time costs (lawyers, land transfer, etc) but homeownership has punishing ongoing costs - interest, repairs, maintenance, etc. Your post is a little vague on your confidence level in doing this massive massive transaction.


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## sprocket1200 (Aug 21, 2009)

you are gonna get slaughtered! keep renting...


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## LondonHomes (Dec 29, 2010)

jmscole111 said:


> I am planning to buy a home by the end of this year. I hope by the time my financial situation will be fair enough to afford this. But will mortgages will be a help? What if i fail to do arrange fund in proper time?


The best thing for you to do is get pre-approved from a lender. Either contact your current financial institution or get a referral from family, a friend, or your REALTOR if you are currently working with one. Make sure not to apply for credit from too many places because each time you do it reduces your credit rating.

Once you have your pre-approval in order you will know that maximum amount you can spend on a house. Although I won't recommend purchasing at your absolute limit. If you have your pre-approval in place then it is usually a simple process to finalize the financing once you buy a home.

However as another poster mentioned you should normally make your purchase offer conditional on financing. This gives you a few days to finalize your financing and the ability to back out if your financing on you new home falls apart.


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## GeniusBoy27 (Jun 11, 2010)

sprocket1200 said:


> you are gonna get slaughtered! keep renting...


Each circumstance is different. So make an evaluation if it's a deal or not a deal. For example, if a house is 20% below market value, would you buy it?

The answer may be yes.


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## sprocket1200 (Aug 21, 2009)

GeniusBoy27 said:


> Each circumstance is different. So make an evaluation if it's a deal or not a deal. For example, if a house is 20% below market value, would you buy it?
> 
> The answer may be yes.


you are a genius. thanks for showing so much commitment!


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## I'm Howard (Oct 13, 2010)

After 25 years of renting, who has paid whose mortgage?


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## kubatron (Jan 17, 2011)

Typical ridiculous internet trolling going on in here. Thanks for the lovely insight and analysis, guys.

Original poster- as someone else said, contact a broker (not a bank) and they'll walk you through it.


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## sprocket1200 (Aug 21, 2009)

jmscole111 said:


> I am planning to buy a home by the end of this year. I hope by the time my financial situation will be fair enough to afford this. But will mortgages will be a help? What if i fail to do arrange fund in proper time?


ok to be fair let's 'analyze' this. 

1. there are no numbers to help.

2. yes, there is a time frame goal, but has the OP even thought out how the landscape will change by then?

3. he 'hopes' his financial situation will be fair enough to afford it.

4. he asks if a mortgage will be a help? ok, let's answer this one. not if he can pay cash, so why even ask in the first place.

5. immediately after this statement he asks what happens if he fails to arrange funds in time? well, then you rent, which is where you should stay until you figure out the other things by giving us something to work with.

the lone critic to us not offering help doesn't provide any, just another non-commital ignoramus. 

my advise was to point out he would get slaughtered and should keep renting. sound advice considering the above. sure not pleasant or delivered with flowers and a kiss, but if that is necessary, then is he really seeking advice or ego boosting.

if ego boosting is being sought, then i must agree with his desires. from that standpoint, then, yes, by all means you should buy. just get a broker and ask for the 'best' rate. get as big a mortgage as you can possibly afford. house prices always go up (yes, I do believe this).

now, from a selfish point of view, I truly would have told him to go get a mortgage. hell, the more people that over expose themselves and lose the better for me. i have cash ready, when the rates go up and we see cracks and some people getting desperate, they they drop there prices. it isn't long until the emotion of it swings and an over correction appears on the downside. then the cash gets deployed and we win.

oh and no, there isn't a subprime market in canada, but emotion doesn't care. couple this with a bull streak in the markets and people third guess themselves about rates for housing (if they haven't yet they are blind).

final thoughts, go buy the house, we have no idea why you want to, but we are happy that you are even considering it. my family and kids thank you...


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## GeniusBoy27 (Jun 11, 2010)

OP: The other thing I would do is to develop relationships with a couple of banks and their bank managers. Although mortgage brokers try to get you the best rates, I actually have no difficulty getting similar rates with a number of the big banks, once I show what I can get elsewhere, and it's because of those long-term relationships.

Should you buy at the end of the year? The question is: "Will you have enough of a downpayment to handle the mortgage with increasing interest rates?" There will likely be a housing price correction, and waiting for it to come down may be sensible to do.

Sprocket: My point to yours is this. A blanket statement of "Keep renting" doesn't always work, even in a situation where prices are falling. And I'll use real-world examples for you. I've had the good fortune of buying a "power of sale" house that was probably 40% undervalued, simply because I had cash on hand and could pull the trigger quickly. How long did it take it to find the place? 3 years. With our holding real-estate company? I've been buying over the past 4 years. Correction or no correction in the price of the properties is irrelevant, because the properties have been cash flow positive or neutral from the start. I can sit through a major negative correction.

For my wife's business, which was one of the properties, does it make sense for her to rent? Absolutely not. Why wouldn't we pay ourselves from her corporation, and know that I have the perfect tenant?

For the majority of people, yes, renting does make sense. The market is probably 15% and climbing above the rental costs presently, but what it hides is a significant variation that occurs between rural/urban, and across the country. In rural parts of the country, there may not be a significant rental market, so that really the decision is local in nature. I just find blanket statements that apply across the country, not very useful when it comes to real estate. Real estate principles do apply, but the market is local, not national.


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## kubatron (Jan 17, 2011)

sprockets, I get your point.


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## marina628 (Dec 14, 2010)

I just bought my 4th investment property since 2009.I spend at least an hour a day looking over listings and I personally do not think we will many have more opportunities in market in next 3-5 years than we already have.I bought a house yesterday that I only seen day before , it was a fairly new Power of sale from TD bank that is probably 10-15% under valued.These deals are always out there ,which is why my agent only sends me listings for Vacant homes.
I know we all expect some sort of rate increase this year but Anyone taking a variable mortgage today already qualifies for the 5 year posted rate which is 5+% .So these waiting on side lines for housing to collapse may miss it because I think the effects of rising interest rates will be so small.
Marriages break up ,people are losing jobs regardless of the interest rates.


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## MikeT (Feb 16, 2010)

http://www.bankofcanada.ca/pdf/annual_page57_page58.pdf


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## kcowan (Jul 1, 2010)

marina628 said:


> Marriages break up ,people are losing jobs regardless of the interest rates.


Look for deals: 

Home #1 was a transfer to a promotion 60 miles away. Seller had accepted a conditional offer. No other action when we came in unconditional and lower. Resold it to him when he realized his mistake and wanted to come back 2 year later.
#2 Marriage breakup and divorce cash settlement pending - stole it at 20% below market.
#3 A builder had over-extended himself and was priced above the market. No action at all until we came in with a stink bid.
#4 Builder had spent little money on ethetics and so took a discounted offer because he had another house being built that he had to occupy to avoid CG.

These four situations all proved lucrative. And I don't believe in owning! There are easier and cheaper ways to speculate.


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## Cal (Jun 17, 2009)

jmscole111 said:


> I am planning to buy a home by the end of this year. I hope by the time my financial situation will be fair enough to afford this. But will mortgages will be a help? What if i fail to do arrange fund in proper time?


Ummm, you said at the end of the year....so you have lots of time to arrange for funding.

If your financial situation does not allow for it at that point. Then you are not ready to buy.


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## marina628 (Dec 14, 2010)

OP ,I think a visit to your bank even to do a preapproval would be a good idea.You can get a 'how much can i afford' calculator on most bank websites so that will be a good place to start as well.Give yourself a pat on the back as you are actually thinking and planning and not like some people who have their minds made up they will buy even if they have to lie about their income , assets and down payment.The fact you are willing to listen to advise is a good thing.

My friend just moved from Israel to Canada , she got her mortgage approved with a fake job letter ,the seller and buyer agent inflated the price to make it appear that she put down 20% as they knew CMHC would not approve her.The broker assisted with the fake job letter,the only people who were not in on this was Scotiabank where she got a 2.25% variable rate mortgage.


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## Shayne (Apr 3, 2009)

marina628 said:


> I know we all expect some sort of rate increase this year but Anyone taking a variable mortgage today already qualifies for the 5 year posted rate which is 5+% .So these waiting on side lines for housing to collapse may miss it because I think the effects of rising interest rates will be so small.
> Marriages break up ,people are losing jobs regardless of the interest rates.


Unless you have a 20% down payment. Most lenders will qualify you at the 3 year rate.


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## Shayne (Apr 3, 2009)

marina628 said:


> My friend just moved from Israel to Canada , she got her mortgage approved with a fake job letter ,the seller and buyer agent inflated the price to make it appear that she put down 20% as they knew CMHC would not approve her.The broker assisted with the fake job letter,the only people who were not in on this was Scotiabank where she got a 2.25% variable rate mortgage.


All fine and dandy until you get charged with fraud or Scotiabank calls the mortgage.


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## HaroldCrump (Jun 10, 2009)

Shayne said:


> All fine and dandy until you get charged with fraud or Scotiabank calls the mortgage.


And that is erriely similar to the BMO fraud that was caught in Alberta, I believe.
In that case, some BMO branch employees were involved in the fraud too i.e. they knew the papers were false and the prices inflated.


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## kcowan (Jul 1, 2010)

US rent versus buy calculator
Looks like Las Vegas, Miami and Phoenix are good bets for buying your snowbird palace! You could use the same ratios to determine that Saskatchewan is a good deal here!


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## kubatron (Jan 17, 2011)

marina628 said:


> OP ,I think a visit to your bank even to do a preapproval would be a good idea.You can get a 'how much can i afford' calculator on most bank websites so that will be a good place to start as well.Give yourself a pat on the back as you are actually thinking and planning and not like some people who have their minds made up they will buy even if they have to lie about their income , assets and down payment.The fact you are willing to listen to advise is a good thing.
> 
> My friend just moved from Israel to Canada , she got her mortgage approved with a fake job letter ,the seller and buyer agent inflated the price to make it appear that she put down 20% as they knew CMHC would not approve her.The broker assisted with the fake job letter,the only people who were not in on this was Scotiabank where she got a 2.25% variable rate mortgage.


yowza to the 2nd paragraph - especially on the inflated price

both agents + an appraiser must be in on the act. 20%?!? wow.


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## kubatron (Jan 17, 2011)

how could scotiabank be that stupid to allow for the scenario.. a +20% increase in price is absurd not to notice. the appraisal should've shown proper comparables. ugh, pathetic.


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## marina628 (Dec 14, 2010)

NO I am sorry I did not make it clear , She had only 13% down but they fudged prices to appear she had 20% down to avoid CMHC .I am shocked as well but I guess everyone was desperate in the situation , the seller had a new house that he had to close in 6 weeks and his townhouse didn't sell so they did what they did to get him a sell ,my friend a house and a mortgage,agents of course made their money as did the broker.There were no appraisals as house was only 3 years old but still it was a $40,000 fix on the price!


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## the-royal-mail (Dec 11, 2009)

That's fraud. I am really surprised to hear that this was possible. I am very disappointed at these people who did this and take a very dim view of them and their actions. Thanks for keeping fees high for the rest of us.


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## marina628 (Dec 14, 2010)

If I had the names of people involved trust me I would be turning them all in.I use the word 'friend' loosely ,she is employed by a company I have dealt with for a few years.I tried my best to discourage her as i believe she will regret buying that house in a couple years.


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