Step by Step for First Time Buyers

By: Justin Lee

If you are a first time buyer wondering if you could cash in on the flood of foreclosed homes on the market, the first step you will need to take is to consider your options. Unfortunately most first time buyers' options are ruled by finances. These materialize in the following questions:

- how much can I afford to put down now as a deposit to hold the property and as a down payment later?

- how much can I afford to pay each month, including any house taxes?

- how much will I need to pay for the legal fees, land titles, moving, etc?

Each of these three things may be moderated by something else. Interest rates are a factor; they dictate the amount of money you will be shelling out each month. The interest rates form a major part of the reason why you should buy now.

They are very low at the moment, although experts suspect that they will be 'pushed' up as the election gets nearer....of course, sometimes predictions are wrong. However, as they are very low right now, it's a great time to look for an investment property.

In order to work out your repayment amount each month, either visit a mortgage broker or a real estate agent, or go online and check the mortgage interest tables. The average mortgage is running at 6% interest now, at the beginning of March.

A holding deposit can be reasonably small, but you will need to put down maybe 5% or 10% when you finalize your deal with the broker. Legal fees can be ascertained by getting three quotes, and moving fees can be reduced if you have loads of strong friends with trucks!

Once you have worked all that out, you must decide what you want, then choose a real estate agent and start looking. How to decide what you want?

Well, forget the lovely old house on the hill, or the swanky new development with the hot tubs - your dream home comes after the 'starter' home. Downsize your goals and look upon this house as a stepping stone.

There are several choices (all ruled by finances, of course). First time buyers can usually afford an apartment, a smaller old home to renovate, or sometimes a condo. The 'sometimes' will depend on the area.

In some areas, condos are still priced low enough for a first time buyer, especially if you can buy a small studio condo. Never fear about re-sale as more and more people are choosing to downsize, and the aging baby boomers may be looking for a small home when you come to sell.

It really doesn't matter too much which choice you make, because whatever you decide to buy, the property market will go up approximately in the same proportion as all the real estate. As realty in North America has been escalating faster than wages, the quicker you buy a home, the better.

It is possible that condos may have an edge and go up in price a little more. Alternatively, if you buy an older home you will increase its value by remodeling it.

Renovating your first old home can be fun and hilarious! Because you are often dealing with an old place, there is not the same concern about 'ruining' it with your amateur decorating! You will soon get more professional - and what a great training ground for that dream home that you will be moving to next.

Alternatively, you might even get clever enough at the D.I.Y. to make this home into your dream home. It's amazing what a couple can do with a paintbrush and a hammer; it's even more amazing (if you buy some pizzas and liquid sustenance) what a few friends can do with paintbrushes!

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