Category: Information For Buyers

What usually happens, as interest rates decline, real estate buying power increases. Currently interest rates are at the lowest they have been in years. The lower interest rates coupled with the current buyer’s market makes buying a home more appealing. Buyers find that when the interest rates are very low, they qualify for more of a loan than when rates are high.

This shift in the market has created a great opportunity for first time home buyers, buyers and renters looking to get back into the Kamloops market. The savings on home buying are in both the purchase price of the home and interest charges. Buyers are able to negotiate more aggressively on a contract now than years in the past. I have found that lately more first time home buyers have begun their search for the first time. Buyers who are also looking to get back into the market or have been renting for a number of years are also beginning to see the value in the lower home prices and low interest rates. Homes in Kamloops are finally beginning to be priced in a range where buyers can justify purchasing a home. Plus, for first time home buyers, they receive further savings because first time home buyers don’t have to pay property transfer tax.

All these factors make buying your first home, getting back into the real estate market, moving up to a larger home or downsizing your home more of a reality!

As the Government of Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC), plays a major role in Canada’s housing industry. The agency offers numerous housing services including research services, market evaluations, and access to affordable financing choices. Programs include aboriginal housing, residential rehabilitation assistance, home adaptation for seniors independence, public and private partnerships and numerous grants and awards.

For many people, especially first time home buyers, saving the necessary down payment is a challenge. Additionally, with less than 25% of the purchase price to put down, a lender requires mortgage insurance for protection against any payment defaults. CMHC makes it easier for Canadians to obtain a home, by providing mortgage loan insurance. By providing this insurance, CMHC limits the lenders’ risk, allowing the lender to finance up to 95% of the purchase price of a new home. You can purchase a property with as little as 5% down. If the cost is $150,000, you only need a down payment of $7,500.

You can become a homeowner, even if you don’t have a large down payment put aside. You just need to meet the following conditions and home ownership can be within your reach.

* The home must be located in Canada and considered your principal residence.
* You must have a down payment of at least 5% of the purchase price.
* Your home-related expenses must not exceed 32% of gross household income
* Your total monthly debt load must not exceed 40% of gross monthly household income
* You must be able to pay closing costs equal to at least 1.5% of the purchase price.

Link

A federal program is in place to assist first time home buyers with the purchase of a home. Under the federal government’s Home Buyer’s Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to finance a down payment on a first home. You are then required to repay your RRSP over 15 years.

You have to ensure that the RRSP funds have been deposited for at least 90 days. You will also have to sign an agreement to buy a new or resale home. Buyers have to qualify the  home purchase.

Depending upon your situation, it might be to your advantage to access savings through the Home Buyers’ Plan. For example, if you had already saved $20,000 for a down payment – and assuming you still had enough “contribution room” in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then you could withdraw the money through the Home Buyers’ Plan.

Your $20,000 RRSP would then count as a deduction for the year. You could also use any tax refund you receive to repay RRSP or other home buying expenses.

Many home buyers looking to purchase a home in Kamloops are trying to find ways to ensure they have an adequate down payment. First time home buyers can definitely put this technique to use. Ensure, prior to making any major financial decisions, to check with your financial advisor, lawyer or tax specialist. These professionals can determine whether this strategy is practical for your financial situation.