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CONTACT INFO |
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REALTORS® Association
of
Hamilton-Burlington |
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505 York Blvd.,
Hamilton, ON. L8R
3K4
Phone: 905-529-8101
Email: info@rahb.ca |
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Financial Services |
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BUYING A HOME - an important lifestyle
and investment decision |
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You
want to buy at the best price
possible. You want your monthly
payment to be as affordable as
possible. You want your home to
increase in value as much as possible.
To make sure all that happens, it is
important to look beyond your
individual purchase before you buy. A
REALTOR® can help you examine the
market conditions, assist you in
evaluating mortgage options and
financing at the most attractive
prevailing rate.
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Affordability Guide |
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How
much can you afford? This depends on a
number of factors. The most important
are your gross household income, your
down payment and the mortgage interest
rate.
The first affordability rule is that
your monthly housing costs shouldn't
be more than 32 percent of your gross
monthly income. Housing costs include
monthly principal, interest, taxes and
heating expenses (p.i.t.h.). If
applicable, it also includes half of
monthly condominium fees. Lenders add
up these housing costs to determine
what percentage they are of your gross
monthly income. This figure is your
GROSS DEBT SERVICE RATIO (GDSR).
The second affordability rule is that
your entire monthly debt load should
not be more than 40 percent of your
gross household monthly income. This
includes housing costs and other debts
such as car loans and credit card
payments. Lenders add up these debts
to determine what percentage they are
of your gross household monthly
income. This is your TOTAL DEBT
SERVICE RATIO. (TDSR)
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About the Down Payment |
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A
mortgage is security for a loan on the
property you own. It is the difference
between your purchase price and your
down payment. The greater the
down payment, the less you have to
borrow, and of course, the smaller
your monthly mortgage payment. A few
options of down payment include your
savings or a non-repayable gift. There
are other options available to you and
this can be discussed with your
REALTOR®.
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Other Costs to be Aware of when you
Buy |
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This
is a list of possible extra costs
involved in buying a home. Some of
them are one time costs and others,
such as condominium maintenance fees
and property insurance, will be
ongoing monthly expenses. THE GOOD
NEWS IS THAT NOT ALL OF THESE COSTS
MAY APPLY IN YOUR CIRUMSTANCES. |
- Appraisal fee - if
your loan is not insured your
lender may require a property
appraisal for mortgage
purposes. A basic appraisal is
somewhere between $150. &
$250.
- Land Survey Fee -
Your lender will require a
survey unless you are
purchasing a condominium.
- Land Transfer Tax -
This applies in most
provinces, including Ontario.
It varies as a percentage of
the property's purchase price.
It is usually between 1% - 4%.
- Home Inspection Fee
- Inspectors in Ontario are
unregulated so fees can vary.
They range from $150 + GST to
$350 + GST. Larger homes may
cost more to inspect. A
two-hour inspection carried
out by an engineer who
provides a written report will
cost closer to the upper
limit.
- Mortgage Broker Fee
- A broker may charge a fee to
find you a lender.
- Property Insurance
- This insurance covers the
replacement value of the
structure of your home and its
contents.
- Lawyer fees - A
lawyer is required to search
the title, draw up mortgage
documents and tend to closing
details. Lawyers fees range
depending on the complexity of
the deal.
- Moving Costs - The
cost of a professional moving
company or a rental truck if
you move yourself.
- Prepaid Taxes or
utility bills. -You will
have to reimburse the seller
on a prorated basis if some
bills have been prepaid beyond
the closing date.
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Discuss your financing options with a
REALTOR®, your banker or a financial
advisor. |
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