How to Buy Your First Home with Expert Advice
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This informative video presentation outlines the recommended steps that first time home buyers should take, including what programs are available. This includes helping new home buyers learn about obtaining the best home mortgage, tax credits, grants, engaging real estate agents, down payment assistance programs and other useful information.
This brief mortgage minute video is addressed mostly to first time home buyers and answers the question “Should you buy a home that is being sold short?” This occurs when the owner owes more to the lender of the mortgage than the actual appraised value of the home.
As an example, consider a home you are interested in as a new home buyer that is listed at $150,000. However, the present owner owes almost $200,000 to the mortgage provider (e.g. a bank). Before you can purchase the house, aside from you, both the bank and the seller must agree with selling the home short, or at a loss.
firsttimehomebuyersinmaryland.com What is the biggest mistake most first time homebuyers make? I learned all the down payment, no closing cost loans, 100% Financing Loans, Grant Programs and the city, county and state programs for First Time Homebuyers in Maryland. I specialize in working with First Time Home Buyers in Maryland and would love to earn your business ~Brian Mayer 443-624-9398
Private mortgage insurance (PMI) tips & how it can determine how much house you can afford. Find out how in this video on buying a home.Expert: Brett Staggs Bio: Brett Staggs has been working in the mortgage industry for the past 6 years. He has worked for a title company, a credit reporting company, and two major banks. Filmmaker: Dana Glover
A recent gloomy forecast from Capital Economics and paralleled by similar reports speculate that housing prices in Canada will drop by 25 percent over the next several years.
This may suggest that Canadian residents consider deferring their new home purchases as prices potentially migrate downward.
In the disturbing forecast by analyst David Madani of Capital Economics released on February 3, 2011, he predicts that housing prices will decline by 25 percent cumulatively over the next few years.
Madani is also suggesting that the effects on real estate investment and spending by consumers may be affected significantly to the point of causing the economy to downturn into a second recession.
It is also argued that the CMHC (Canadian Mortgage Housing Corporation), which has recently changed the mortgage rules for home buyers, could experience future losses based on possible real estate devaluations and affect other viable financial institutions.
In support of this forecast, both The Economist magazine and chief economist David Rosenberg from Gluskin Sheff and Associates have also predicted the same level of decline in real estate housing prices in Canada.
Although these forecasts are from highly reputable resources, they do not necessary reflect the consensus of all real estate financial advisors.
Other experts consider that the housing scenario in Canada is quite different from that experienced in the United States over the past few years, although there are some parallel circumstances.
The Canadian Real Estate Association has predicted that housing prices will likely decrease by 1.3 percent in 2011 even though providing four revised projections during the past year.
Although this is far from the 25 percent decline suggested in the above forecasts, it is important to understand that the decline is projected as cumulative over the next few years, even though this phrase is never actually qualified.
For logistical simplicity, if a house valued at $100,000 were to devalue by 4% percent over seven years consecutively, its resulting value would then be approximately $75,000.
At a rate of 7%, it would take about four years and at an extreme of 10%, it would take less than three years for the value to fall to this same level.
There is no way to predict what constitutes a few years in any real estate market. The duration could possibly range from two to seven years and potential buyers should only consider that a possible correction may be forthcoming.
In addition, any potential correction would not only affect existing real estate home values, but the observed frequency of home sales, which would likely also decline.
The average home price purchase ratio to income has increased significantly from 3.5 to 5.5, meaning that it takes more than five times annual income to purchase an average home. This is considered by many analysts to be unsustainable.
Low interest rates render it easier for purchase and finance a new home with the expectancy and perhaps complacent attitude that interest rates will remain low and thus also mortgage premiums.
The amount of debt incurred by Canadian residents has increased substantially over the recent years due to the availability of low-cost loans.
An increase in prime lending rates by several interest points could dramatically affect the likelihood of repayment and have other economic repercussions as experienced in the U.S. when sub-prime loan default rates began to increase.
Recent changes by the Canadian Federal government reduced the maximum mortgage length from 40 to 35 years and lowered the financing limit to 85 percent of home value from the previous 90 percent.
This may be considered as a possible defensive measure or an unqualified prediction that the market will change.
Results released by the TREB (Toronto Real Estate Board) indicated that home sales for January, 2011 declined by approximately 13 percent with respect to the prior year.
The average home selling price actually increased slightly by about 4 percent respectively. High market prices for homes may not be sustainable if there is a continued decline in sales.
Although no significant change has been observed in the number of homes listed for sale, the average duration between listing and selling has increased by almost 30 percent over the previous year.
In conjunction with this, there may be less incidence of multiple offers and an increased likelihood of underbids being accepted.
If there is any evidence to support the dim forecasts provided by David Madani of Capital Economics, the Economist magazine and economist David Rosenberg, it should be carefully reviewed and balanced with individual wisdom and strong financial advice.
If the prime lending rate were to rise significantly by several interest points, this could affect the ability of many people seeking an affordable first time home purchase.
This may have dramatic consequences as suggested in the forecasts, but likely only for those that were leveraging their finances heavily and assume that interest rates will remain low.
Those in a stable financial environment, with low debt loads, adequate income and can afford a down payment of 20 percent or more for a home purchase likely have no cause for concern and may benefit by deferring a real estate purchase as prices possibly become lower.
A potential downside to waiting to buy a new home is that even though the purchase price may decrease, interest rates could rise and render mortgages premiums more expensive to manage. Each and all of these factors should be carefully considered by any new home buyer now, and at any time always balanced.
B. James Kudlak, Copyright, All rights reserved worldwide.
I’m preparing to purchase my first home but have not found a mortgage agent yet.
Is there any advice on government programs for first time buyers? I’m looking for the best advice to save money on a mortgage.
Does anyone have any advice on how to buy smart when dealing with real estate agents?
Any tricks on how to deal with them. I really want to avoid getting taken of advantage of.
Your advice is really appreciated! Thanks!
The Canadian Federal government recently announced changes to the rules for home buyers seeking a mortgage.
The maximum amortization length of a mortgage has been reduced from 35 to 30 years and the financing limit reduced from 90 to 85 percent of appraised home value. These changes become effective March 18, 2011.
In addition, lines of credit based on home value will no longer be backed by government insurance as previously provided by the Canada Mortgage and Housing Corporation (CMHC). These announced changes become effective one month later, on April 18, 2011.
Most families or individuals seeking to purchase a new home in Canada will likely not be affected by the government policy changes.
Those that are financially stable, can provide a minimum of 20 percent down for a home purchase and have a manageable debt load will observe no negative effects.
However, there is concern for those who wish to leverage their home equity to the maximum by obtaining the highest possible financing limit, the longest mortgage period, and/or use a home-based line of credit.
Even though it was, but no longer possible, it is unwise to do so and can be potentially financially dangerous.
The primary reason for this is due to the possibility of prime interest rates increasing.
The government is acting on the behalf of all Canadian citizens wishing to purchase homes as well as anticipating a possible domino effect that could occur to the financial system for multiple reasons.
First, it is entirely possible that the prime lending rate as set by the Bank of Canada could rise by several percentage points over a period of time.
This action could place highly leveraged borrowers at risk of defaulting on their home loans or mortgages.
The Canadian government does not wish to see a recurrence of the mortgage based financial problems experienced by the United States in the past recent years.
To quote the Finance Minister of Canada, Jim Flaherty,
“We want to caution Canadians that we will not facilitate excessive debt assumption by some Canadians at very low interest rates because that will lead to trouble in the medium and longer term.”
Secondly, it is no secret that Canadian household debt levels have risen considerably over the past several years and are a cause for concern. They are approaching U.S. levels and a significant portion of debt is related to mortgages.
Lastly and some good news is that the action by the Canadian government to change the mortgage rules is likely to be seen by the Bank of Canada as a positive action to control excessive spending and reduce the likelihood of an increase in interest rates.
I’m a first time home buyer (25 YO) and I’m 100% sure that I want to buy a house when my current lease is up. I have already pre-qualified so I know what I can afford.
My problems/questions/issues:
-VERY limited upfront finances available (concerned about having enough for ernest deposit and closing costs)
-Uncertain as to realtor or go it alone (concerned about commission costs)
-If going alone, any advice?
-How to choose a mortgage broker (if you shop, does every broker run your credit everytime? Don’t want that!)
-How long is the process?
-Any other advice you want to offer!!
I really don’t know where to look for this info, who to trust, etc – hope to find someone here!
We will be signing for our first home next week. The mortgage lender owned the house and this is for our first year, financing it himself, because of our credit points.
The second year, we are going to in house finance. Would we still qualify for the first time home buyer tax credit even though we have a different loan situation?
Thank you in advance for all helpful advice.
I need a bit of information here. I know as much as I can find about loan assumptions and have consulted with the VA. I have been in my house for about 2 years and am ready to move. My buddy will assume my mortgage (cut down on costs). My only question is this, will he be considered a first time home buyer and get his 8k tax credit? Or since he is assuming a loan is he not considered first time home buyer?
My husband and I are ready to buy our first home. My grandma is selling her 3 bedroom house and it will be perfect for us but we are totally clueless!!
We’ve never bought a house and neither have our parents so we have no idea what we’re doing. Where should we go to see if we qualify for a loan?
Should our regular bank be able to help us or should we contact a bigger mortgage lender?
Thanks for the help!
I live in Colorado, just starting a new job where I will make a minimum of 68,500 (medical field so I will be able to increase my income to about 75,000 with extra hours). I’d REALLY like to buy a house, but with being a new graduate, I basically have very little for a down payment. I don’t know how much of a housing payment I can afford per month while still saving money, etc. No student loans need to be paid off, the government is doing that for me, and I have minor other monthly payments, no children, and I am single…
My question is, are there any downsides to an FHA loan?? Can someone give me a straight answer about how much of a mortgage I can afford, instead of these generic online calculators?? DON’T REPLY WITH GENERIC ADVICE THAT I HAVE ALREADY FOUND ONLINE. I would like to hear someone’s personal experience. Being a first time buyer, I don’t want to live beyond my means and become another casualty of the housing market…Thanks!
I really need help! I am purchasing a condo in MD and am quite confused. I will be paying the full mortgage, however want to add my father somewhere on the property in case something tragic happens to me (don’t want the state to take it!).
Is there a way I can add him to the property without tax implications? He is already a home owner. I want to be the primary homeowner. I don’t want it to show as he owns 2 homes and then worry about taxes. Any suggestions? I know I can create a will, but putting him on the property would be better.
I haven’t purchased the condo yet, but am in the process of doing this. So I wanted to know that if it would make sense to add him as a co-owner, because I would rather do it now then have to pay for an attorney later. I’m not worried about selling without his consent or anything.
I’m very new to this, so want to know what people usually do. When you buy a place, what do you do? I would obvisouly rather have my family have ownership over it then some bank. I know I’m thinking into it, but life is unpredictable! I want to know before settlement in case I need to get work done by the title company. It seems like most people are suggesting not to add him because I might lose any available tax breaks.
Thanks in advance for your help!
