HELP! First time buyer here...

[Devils_Advocate]

I'm finally looking to take the big step and purchase my first home.

Any advice for the property virgin?

Best place to find listings, agents, mortgages, brokers, banks and your experiences welcome.

Good or bad.

 

[DQ Guy]

My only advice is
To ask lots of questions, and get it ALL in WRITING

 

[Validator]

Also, there are some informational seminars/presentations for fthb'ers. I attended these, and this helped give me a good idea of what to expect. The other bit of advice - don't let emotion get involved (as best as u can).

 

[chilli]

Why pray tell are you thinking about buying a home now????

boggle...

You shouldn't even be thinking about buying in a down market.

There is at least another 1-2 yrs of price reductions ahead of us.

 

[visiting]

Why pray tell are you thinking about buying a home now????

boggle...

You shouldn't even be thinking about buying in a down market.

There is at least another 1-2 yrs of price reductions ahead of us.

I don't agree with Chili, your first house, go for it, if you have the funds to put into it, even if the market goes down a little more nobody will care in 10-15, 20 years...., there is a cost associated with lost opportunities. If you are buying a properlty to flip, I agree with Chili, as you don't want to own it a long time, it would have to be a steal...


Good luck!, Don't forget to ask questions, and check under carpets!!!

 

[spicdick]

much more unemployment coming this year as spin off recession problems hit home. if buying now , get a super deal. you are driver of the deal so grind hard and low. prices will be coming down for atleast another year. but if job is secure go for it. in 5-10 years you will be so happy you did this. if buying house get one with a basement suite.
remember the three rules.
location-location-location

 

[rampart]

Of course, this is a shaky time to be purchasing a home especially your first home. The most important questions are; do you plan on living in this home for more than 10 years or is your life at a point that you may change careers, family life or move in the next 10 years.

Anything less than 10 years you are looking at huge investment input besides the purchase price. These being minor or major renos which sometimes are unrecoverable in the resale, those pieces of furniture or knick-knacks that are right for this home but will not fit in your next home, and time spent figuring out how to make your home look better for yourself. Anything more than 10 years will be an investment into your future feeling of security.

 

[emilioa4]

here's my two cents.... we dont really know how long the market will keep going down, for all we know it could start to turn around and stay level and even slowing increase again. i do agree though that you do need to be very aggresive, do not pay what they ask. always start the offer low, and always look for the good deals. do not finance 100%. if you cant save any money for a down payment, you cant afford to keep your house, you need to have financial dicipline. also just because the bank says you can borrow 1 million, doesnt mean you should, borrow and buy a house within your means. would be a good idea to look into a house with a basement suite, they help pay the mortgage. sure it can be difficult to live with people under you and having to deal with them, but sacrifice now, and you will enjoy your life much more later( sound cliche i know, but i now own 7 houses doing it this way.... good revenue coming in now and im 31 yrs old!) also i recommend using a mortgage broker. each time you go a visit a bank and they do a credit check its a negative ding on your score. a broker checks only once then shops around for the best rate for you. i have been using one for the past ten years. good luck for you, you are doing yourself a good deal in the long run.

 

[chilli]

You suggest that one live under a bridge for a couple of years? Or perhaps waste potential equity paying rent? A body's got to live somewhere. If they are ready to buy & have got the financing, gio now.

You really cannot time the markets. Chilli could be right... But then again, time might tell that now is the bottom of the cycle.

In all good consciencious I could not ever advise anyone to buy while markets are going down.

10% of a modest $300,000 condo is $30,000 per year (housing prices dropped 10% last year and are forcast to do the same again this year).

So can you afford to lose $30,000?

$30,000 per year is $2500.00 per month. Plus there is strata fees, property taxes, etc...

Now if he is buying a house - then take that $300,000 and bump it up to minimum $500,000

Now the math gets worse for buying.


So yes for first time buyers, waiting makes prudent financial advise.

 

[emilioa4]

hang on hang on..... youve got to look at the big picture here. first, look at what the house price was asking for at its peak, then look at what they are asking now... there should already be a major price reduction and if not then yes its still listed too high. its not as though you are going to lose 30,000 every year for 10 years!?! you are not going to find the 500,000 home going for 150,000 next year man or even over the next ten years. if you look at it, the burst of the bubble that we had has the home prices dropping, but the prices are still at about 20-30percent over what was ten years ago, which is a normal growth rate. i wouldnt count on home prices dropping so significantly anymore, yes they may still go down as a influx of over inventory comes onto the market, but if anything it is only going to spur the spending cycle again, thus a leveling off or moderate increase in price. if you can find a good deal now, buy now.

 

[HeMadeMeDoIt]

In all good consciencious I could not ever advise anyone to buy while markets are going down.

10% of a modest $300,000 condo is $30,000 per year (housing prices dropped 10% last year and are forcast to do the same again this year).

So can you afford to lose $30,000?

$30,000 per year is $2500.00 per month. Plus there is strata fees, property taxes, etc...

Now if he is buying a house - then take that $300,000 and bump it up to minimum $500,000

Now the math gets worse for buying.


So yes for first time buyers, waiting makes prudent financial advise.

I agree with Chilli on this one. The last economic forecast RBC issued warned of a likely 23% drop over the next 24 months in residential real estate. Apply that to a $300k condo and you're looking at almost $70k loss in equity over the next two years. This could essentially be your downpayment going down the drain.

If I was you, I'd decide on the neighbourhood you want to buy in and keep an eye on The MLS Site and watch where the market heads in the next 6-12 months.

 

[emilioa4]

just out of curiosity, which city are you guys all writing from? i am from edmonton.

 

[FunSugarDaddy]

In all good consciencious I could not ever advise anyone to buy while markets are going down.

10% of a modest $300,000 condo is $30,000 per year (housing prices dropped 10% last year and are forcast to do the same again this year).

So can you afford to lose $30,000?

$30,000 per year is $2500.00 per month. Plus there is strata fees, property taxes, etc...

Now if he is buying a house - then take that $300,000 and bump it up to minimum $500,000

Now the math gets worse for buying.


So yes for first time buyers, waiting makes prudent financial advise.

That assumes someone as some special knowledge of where prices are going in the future. We just had a whole thread where most predicted the market would drop 30-40% and as near as I can tell 15% appears to be the most accurate number.

One easy way to tell if house prices are too high is to use basically the same test as Shiller-Case use, which is net rental income/home purchase.

If one does that the market is probably over priced, however, the fly in the ointment is that if one goes by that calculation the market has been overpriced for over 20 years.

Another interesting calculation I'd consider would be interest expense paid each month verses rent. If the monthly interest expense is 1500 and say you're paying 1800 a month including repaying the principal and you can rent the same place for 1200 it makes more sense to rent. Hoever if the rent is more like 2000 then then interest expense plus ongoing costs might be cheaper. Personally I'd be surprised even under this formula if purchasing makes sense, but having said that I don't consider buying your first house entirely a financial decision. I remember when I bought my first house my wife said if you want kids, I want a home so the financial equation became secondary.

 

[chilli]

i wouldnt count on home prices dropping so significantly anymore... if you can find a good deal now, buy now.

Yikes is all I can say!

You must be a realtor, mortgage broker or a banker or related to one to be so optimistic that you would advise anyone to buy right now...

There are more significant price drops ahead of us.

How do I know?

Demographics.

We have an aging population having smaller families in a world wide recession and that my friend is the "big picture".

 

[emilioa4]

i dont work in anything related to that industry actually. i work in the oilfiled. not trying to promote anything, just i havent had any negative effects to my portfolio at all. maybe im lucky buy i think i am doing the right thing.

 

[Validator]

1) Fthb is a very common abbreviation but I'm honoured I rec'd the award.

2) The guy asked us for advice on how to purchase, not whether he should or not

3) A few months ago tsx was at 7500 points. I'm sure many of u wouldve said not to buy stocks. Well it's 10500 points now!

4) That said, no one can predict so ur guess is as good as mine is as good as his. So how about stick to advice on how to buy ur first place?

 

[hunsperger]

...

I love these threads...

person says he is about to purchase house...

pseudo-financial advisers come out of the woodwork ...

they know nothing of about his financial position ...

they know nothing about his risk threshold ...

they know nothing about his wants and needs ...

they know nothing about what he values and doesn't value in life ...

they know nothing about what his goals and objectives are in purchasing a home ...

they don't know how long he intends to be in said home ...

but there they are ready to dispense financial advice...

I also have a question...

if real estate goes down 20% in the next two years and up 40% in the next four years...

how much has he lost if he owns the home throughout this period...

 

[hunsperger]

...

2) The guy asked us for advice on how to purchase, not whether he should or not

4) That said, no one can predict so ur guess is as good as mine is as good as his. So how about stick to advice on how to buy ur first place?

exactly...

as I said, I love these pseudo-financial advisers...

 

[kafka555]

Non-financial advice:

1) Find a competent home inspector

2) Use the inspection report to beat the seller down on price

3) If buying a condo, ask if there are any engineering reports, and get your competent inspector to evaluate them.

 

[FortunateOne]

Non financial advisor POV is you've got a lot more motivated sellers (can't afford to keep their home -- plus they paid a lot less than the current market value, so can be open to lower offers), plus really low interest rates, plus a slower market so mortgage brokers, bankers, real estate people etc are all also fully motivated to make sure you can buy whereas last year they couldn't care less about you if you didn't cross the t's and dot the i's. In addition, you see more bank owned property for sale where again the final selling price can be really lower.

For someone stable in their work and with a downpayment already, it may just be a great time to be looking.