First time homebuyers beware of the benefits of buying in this market as opposed to waiting another few years.
Interest rate are at emergency levels now. There is only one thing that can happen with interest rates the way they are now, and that is they will go up. First time buyers pay attention to these examples of how much they could save in interest if they bought in the current low interest rate environment versus predicted rates over the next couple of years.
If interest rate are not enough of an incentive to think about buying now, here are some questions buyers have and possible answers to their querries.
Down payment:
This is always an issue when it comes to buying a home for first time buyers. What they should know though is lthat there are many solutions available today that can help them with their down payments.
A great deal of Lenders today
will allow for a gifted or borrowed down payment. And of those lenders that will not provide this alternative, could offer cash-back options that can be used as a down payment.
Some lenders offer a “free down payment” or “flex down” , this of course client will end up costing 1% more in their interest rate, but the program will help them get in the homeownership door and start accumulating equity earlier. The first time homebuyer must, however, stay with the original lender for the full initial five-year term or else they’ll have to pay the down payment back
First time homebuyers should know that last year there was a $5000 increase in the RRSP Home Buyers Plan. This means first time homebuyers can now withdraw up to $25000 each from their RRSP’s for a down payment which is free of Tax and is also interest free. Can you imagine how many people still don’t know this?”>
As a First time home buyer, i empathize with you. I know you are getting information – through the Internet, friends, family members and anyone willing to voice their opinion on a given subject. Often times this information is not what you would say is accurate. What you need, therefore, is education and coaching as opposed to being bombarded with more information.
Once you have gotten pre-approved and before you head out home shopping. You should try and speak to a trusted Realtor. This will help set their minds at ease, because many first-time buyers are overwhelmed by the financing and buying processes, and often don’t know what it truly costs to purchase a home. Providing real examples can go a long way in showing them what it costs to buy a home in their area versus what they’re currently paying in rent.
Did you know that If a renter is currently paying $800 per month, for example, with that same payment (including taxes) they could afford to buy a $120,000 home. And assuming real estate values increase 2% per year over the next five years, the new homeowner would have accumulated $27,000 in equity in their home. If they continue renting, however, this $27,000 has generated equity in someone else’s home.
Often times this whole process comes down to trust. Remember that a good Realtor can answer all you questions and usually a realtor has team members that will make your buying process easier. Members such as lawyers, Mortgage Brokers(this is perhaps the most important factor and team member) inspectors, etc, etc.
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