Is now thetime to buy?
So the question posed is “what if Iwait for a year to purchase my new house. Prices are falling aren’tthey? Won’t it be cheaper if I wait?”
Well actually, probably, no.
If we are dealing with a non-cash buyerthey are going to have to finance their purchase with a mortgage,hence the reason they are talking to us. So if you do a quickcomparison of what the monthly payments would be for a purchase todayand a proposed purchase a year from now if the anticipated 1%increase in fixed term mortgage rates actually occurs. They are:
Purchase today:
Purchase price $300,000
5% down payment (15,000)
Net amount due $285,000
CMHC Fee 7,838
Total Mortgage Amount $292,838
Payments based upon a 5 year rate of3.29%, and a 25 year amortization are $1,430
Now if they consumer decided to waitfor a year in anticipation of a price drop of 10% in real estatevalues this is what the purchase would look like:
Purchase price $270,000
5% down payment (13,500)
Net amount due $256,500
CMHC Fee 7,054
Total Mortgage Amount $263,554
Payments based upon a 5 year rate of4.29%, and a 25 year amortization are $1,428
2 Dollars !! That is the difference inwhat most people are worried about – what their payment isgoing to be!! Less than the cost of a Tim Hortons coffee!
Now is a great time to buy. Lots ofinventory to pick from, some of the lowest interest rates in history,and the ability to get into a home at a reasonable monthly cost thatis as cheap as paying rent.
If you have to live somewhere it isalways better to be in your home, building equity in your property,not in your landlord’s property.....
