Sara Kareer Century 21 Millennium Inc Brampton Mississauga Vaughan Real Estate

Buying a Home - Determining 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.

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.

I hope you found the above OREA article informative. If you have any questions about determining your affordability, please don't hesitate to give me a call. I'm here to help you.


Sincerely,

Sara Kareer
Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) http://www.sarakareer.com
(web) http://www.century21.ca/sara.kareer

The Government of Ontario is exploring the possibility of harmonizing the Provincial Sales Tax (PST) with the federal Goods and Services Tax (GST). This "harmonization" will result in an increase in "professional service" costs -- legal fees, real estate commission, home inspections, etc -- resulting in the current GST going from 5% to the proposed HST of 13%. This could add up to thousands of dollars in extra closing costs for the consumer.

As a result, the Ontario Real Estate Association (OREA) is asking consumers to voice their opinion and send a letter to their MPP. Please see letter below and click the link to send a pre-drafted letter to yoru MPP. Please note, your MPP's name and address will be automatically generated on the letter based on your information.

Call for Action
Harmonization of Sales Tax

On March 26th, 2009, the McGuinty government announced its intention to harmonize the goods and services tax with the provincial sales tax.

As a result of this change, provincial sales tax will now be levied on legal fees, appraisals, real estate commissions, home inspection fees and other services related to a real estate transaction.

OREA believes that this tax grab will severely hurt the resale housing market and reduce affordability for Ontarians trying to buy a home.

We encourage all OREA members and their clients to write their MPP to express their outrage at these new taxes and to tell them how badly they will hurt the real estate market in your area.

Send an e-mail to your MPP on this issue now by clicking here.

Should you receive a response from your MPP, please forward a copy to governmentrelations@orea.com or via fax: (416) 445-2644 to the attention of the Government Relations Department.

Thank you for your help.

Source: OREA


Sincerely,

Sara Kareer
Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) www.SaraKareer.com
(web) www.century21.ca/sara.kareer

My husband and his business partner own a Petro Canada gas station in Brantford, Ontario. The convenience store sells various Lottery tickets, and has sold many winning scratch tickets. In fact, one customer won $21,000 on a scratch ticket.

Yesterday evening, my husband received a very excited phone call from an employee working at the gas station. After losing money at the local Brantford Casino, a lady came into the gas station and purchased a $20 scratch ticket. Guess how much she won...one million dollars! Just like that!

That's what I call a great return on investment!

Have you had any luck with scratch tickets?

What would you do with one million dollars?

If you haven't had any luck with scratch tickets, or Casinos, and are looking for a good return on investment, give me a call, I can lead you towards some fantastic properties; either commercial or residential.

Sincerely,

Sara Kareer
Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) www.SaraKareer.com
(web) www.century21.ca/sara.kareer

Since February, the Financial Services Commission of Ontario (FSCO) has suspended the licenses of over 100 Mortgage Brokerages for not having errors and omissions insurance. The purpose of errors and omissions insurance is to protect the professional against legal liability resulting from the professional's negligent act, error or omission. If your mortgage is through an agent whose brokerage has been shut down or suspended, it is possible your mortgage is no longer being worked on and you may not even know.

FSCO regulates registration of individuals and organizations who conduct business as mortgage brokers under the Mortgage Brokerages, Lenders and Administrators Act. In addition, FSCO conducts inspections and investigates complaints regarding the activities of mortgage brokers.

For many people, buying a home or condominium is the biggest investment of their lives.

Choosing the right mortgage broker is critical to completing a stress-free purchase. I deal with reputable Mortgage Brokers who can assist you in obtaining the best rate and the best mortgage terms/conditions based on your needs. I will provide you with the names of some very dependable Mortgage Brokers and the choice will be yours. This service is absolutely free for you.

Buy Smart...Don't take chances with your biggest investment.

Call me today, I'm here to help you.


Sincerely,

Sara Kareer
Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) www.SaraKareer.com
(web) www.century21.ca/sara.kareer

Are you an empty-nester looking to down-size your present home? Are you looking for a safe place to call home, a place that allows you the freedom to enjoy the lifestyle you want with the amenities you desire?

Nestled in Brampton, Rosedale Village Golf & Country Club is a private, secure, gated community that caters to adults 50+. It's located close to shopping malls, hospital, biking trails, parks, conservation areas, GO and public transit, and major Highways 410, 407, and 401.

Rosedale Village offers homes that compliment your lifestyle...Detached Homes, Semi-Detached, Townhomes, and low-rise Condominiums featuring fantastic layouts and architectural design.

Rosedale Village Golf & Country Club has the facilities that cater to your desired lifestyle...as relaxed or as active as you wish.

• Private, Executive 9-hole Golf Course
  
• Wonderfully designed Club House and Recreation Centre
  
• Multi-Purpose Auditorium, meeting room, and more!
  
• Exercise Room
  
• Indoor Pool
  
• Fireside Lounge
  
• Tennis Court
  
• Lawn Bowling and Bocce Facilities
  
• Gorgeous Landscaped Parks
  

From Card Games to Chess games, from Billiards to Shuffleboard, from Crafts or just getting together for Coffee, you'll find a group who shares your interests. You'll meet new friends while staying conveniently close to family and old friends too.

Come experience all that Rosedale has to offer you! You'll be glad you did!
Call me for your personal viewing of this fantastic gated adult community.

Sincerely,

Sara Kareer
Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) www.SaraKareer.com
(web) www.century21.ca/sara.kareer