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FIRST TIME BUYERS IN KINGSTON - TICK TOCK!

By S Emo

Real Estate Agent with RE/MAX Riverview Realty

January 19, 2010 04:57 AM

Kingston, ON

Even though household debt relative to income has risen sharply in Canada, it is well below U.S. and British levels. In a reactive rather than proactive response, Finance Minister Jim Flaherty said in a recent interview;

"Canada may require people taking out mortgages to come up with a larger down-payment if it looks like indebtedness is getting too high. The likely action we will take is to increase the size of the down-payment from 5 per cent to a higher number and reduce the amortization -- bring it down from 35 years to something less."

What this means to the hopeful future homeowner is that you'd better JUMP into the housing market pretty darn quick! No more sitting on the fence. No more waiting for the stars to be aligned and the moon to be in the right quarter. JUMP and JUMP FAST!

TICK TOCK KINGTON

It also means the same to the existing homeowner who has outgrown their home and is hoping to move up.

TICK TOCK KINGSTON

Right now, first time buyers have a few options to them such as buying a home with 0 - 5% as a down-payment. Some institutions are providing Cash-Back options. What the numbers show are:

Purchase price $100,000 = a downpayment requirement of zero dollars up to $5000
(plus closing costs - Right now a first time buyer is rebated their Land Transfer Tax too - more to follow on that subject!)

[not that there are many homes available for $100K but I made it simple math!]

Calculating on a current 5 year term @ 3.89% over a 35 year amortization, the monthly P & I payment would be $434.35

If the 35 year amortization is reduced to a maximum 25 year amortization the monthly payment increases to $520.07

That in itself, will reduce the amount of mortgage you will qualify for because your Debt Ratio will be higher.

TICK TOCK KINGSTON

Add to that the increased down-payment amount that might become a requirement . . .

Popular thinking is that the downpayment requirement might jump from 5% to 10%

How long has it taken you to save $5000 to allow you to buy a $100,000 home? (Most likely it will be a $150K plus home)

Will you be able to save $15000 for the down-payment anytime soon? (plus your closing costs??)

TICK TOCK KINGSTON

If you are already fortunate enough to be in your first home - congratulations to you!!! But these potential new rules apply to you too I'm sorry to say. If you are a typical first time home owner, you most likely purchased your home with zero money down, in the past 2 - 3 years, correct?

You've made some improvements to the home, yes? You've increased your family size and have outgrown the home or you feel your position has improved somewhat? You're ready to take a step up but again, I say to you:

TICK TOCK KINGSTON

This change is going to affect your new purchase, with you too needing more of a down-payment. But more importantly, it is also going to affect the sale of your existing home because there will be fewer people in a position to buy because they haven't been able to save the new required down-payment.

I say to you; get your home listed for sale quickly and begin your search for your new place just as quickly :0)

TICK TOCK KINGSTON

And while you're at it, write a letter to your MP stating how this will only become a horrible downward spiral!

I can help you find that perfect place so give me a call to get you the best deal - I love to negotiate! I also use innovative selling techniques to get your home sold fast! BUYING or SELLING - I'M YOUR REPRESENTATIVE in Gananoque, Kingston and the 1000 Islands!