We have include some general information about buying a home in the Greater Moncton area, be sure to fill out the contact form above to recieve our free information package with lots more information and tips on buying a house.

Introduction

We all need a place to live in. Some of us, rent a home, others, buy one. All things being equal most Canadians prefer to own their home and this publication focuses on the buying process.

Choosing a home to buy starts with needs and desires and should proceed logically until you find something you can afford and like. I think this information will help bring into balance some of the many factors to consider when deciding; how best to meet your needs through home ownership.

It will help you assess your housing needs, how much money you can realistically put towards meeting those needs and reviews the pros and cons of renting and buying.

It contains information and advice about the purchase process including financing.

For most of us buying a house is the biggest financial investment of our lives. Yet a surprising number of people follow emotional impulses to the exclusion of sound thinking when they make an offer on a house. Too often they regret their folly.

Unless you buy a home purely for investment purposes, you will feel emotional attachment to the house you choose.

But not only should you pay attention to the new home but also to your new environment. It is equal if not more important and here I hope to be of help to you too.

Taking Stock of Your Housing Needs and Financial Resources

There are three factors to consider before setting off to find a new home:
Stage of life, what you can afford and whether you should buy or rent

Stage of life

When looking at a home, it is important to consider the number of people it must accommodate and the things they like to do. A family with children, pets and hobbies such as gardening and restoring antique furniture obviously has housing needs vastly different from a newly-retired couple with a passion for travel.

Even though your individual circumstances will ultimately govern your housing choices, it is possible to generalize and draw some conclusions about what you need now and what you probably need in the future.

Generally speaking there are three stages of development for a family or for a group of people living together.

The First Stage
People under 35 years of age have rapidly changing needs. The size of families usually increases, requiring larger or different accommodations. Income earners often switch jobs at this stage and sometimes this means a move to another city. Single people, too, tend to move around at this stage of life. Most home owners buy their first house at this stage.

The Second Stage
Between 35 and 50 years of age, life becomes more stable. Income earners usually have secure jobs and the family size remains the same. Families and individuals at this stage tend to stay put.

The Third Stage
When they pass 50, people tend to be even more stable. Family income earners rarely change jobs and their children set out on their own. Third stage families usually do not need as much space as before, yet are reluctant to move because they are comfortable where they are. If they do move, it will likely be for personal reasons such as infirmities, which make home maintenance too hard, or to accommodate a retirement lifestyle.

How adequate is your present home?

• Are you crowded?
• Do you have enough room for your possessions?
• Is it conveniently close to school, or work, churches, shopping and so on?
• Do your kitchen and bathroom facilities meet your needs?
• Perhaps someone in the family wants to start a home-based business, is there room?

What can you afford?

When hunting for a new home, knowing up-front what you can afford will help you save time and quite possibly disappointment later on.

Follow these steps to find your price range:

1) This set of calculations will give you an idea of how much you can afford to pay for a home.

Your gross annual salary	$...................................
Your spouse's gross annual salary	$...................................
Other income	$...................................
Multiply this gross income X 2.5	$...................................
Approximate price you can afford	$...................................

                                

Before hunting for a new home, know exactly what you can afford.

2) Aim at consuming no more than about 30% of your monthly income, for housing payments.

Including heat, property taxes and, if applicable, 50% of condominium fees if you are thinking of a "condo" .

This amount is referred to by mortgage lenders as the Gross Debt Service Ratio (GDS).

Do this calculation to find out how much you can put towards housing payments.

Your gross monthly income	$...................................
Your spouse's gross monthly income	$...................................
Other income (Monthly)	$...................................
TOTAL X 32%	$...................................
Your monthly payment ceiling	$...................................

3) You may have other monthly financial obligations such as car and credit card payments. These payments, plus your mortgage, are called Total Debt Service Ratio (TDS).

Monthly debt payments	$...................................
Monthly mortgage payments	$...................................
TOTAL	$...................................

These payments should consume no more than about 40% of your gross monthly income which you calculated in step 2.

4) A minimum 5 per cent down payment is required for regular high ratio insured mortgages loans which exceed 75% of the purchase price or the value of a house.

To rent or to buy?

Renting advantages:

• Preferred by many for economic and lifestyle reasons.
• Usually less expensive than ownership although tenants usually have less control over their housing costs than home owners.
• Often includes on-site recreation facilities.
• Provides considerable flexibility if frequent moves are likely.
• Minimal responsibility for property upkeep.
• An important consideration if you dislike or haven't the time for maintenance or garden work.

Buying advantages:

• Opportunity to select or build a home to suit your taste, needs and interest.
• You choose what to do with the house once you own it. (subject, of course, to municipal bylaws).
• Generally increases in value so there is a return on your investment.
• Even a 2% inflation rate will increase house prices by 80% over 30 years.
• That's a tax free capital gain of $ 200,000 on the $ 250,000 home you buy now.
• While you're acquiring a substantial capital asset, you are also getting security of tenure, control of your own living environment and pride of ownership.
• More control over cost than tenants.
• If your monthly rent is $ 1,200 An equivalent amount monthly will fund a mortgage of $ 177,542 (@ 6.6% 25 year amortization).

Other benefits of buying now:

• Lowest interest rates in decades.
• Special programs available: RRSP Home buyers Plan, allows you to borrow, tax free, up to $20,000 ($40,000 for couples) from your RRSP.
• 5% Down payments, with an insured mortgage.

Home ownership pays off in the long run: a study

A Toronto forecasting firm "Clayton Research" concluded that the net worth of homeowners will be $50,000 greater than renters after 20 years and $ 167,000 greater after 30 years, assuming inflation will be 2% per year. It also found that initially home ownership costs more than renting, but pays off in the long run. Unfortunately renters have a tendency to spend money on other things.

Buying a House

Buying a house is probably the biggest financial investment you’ll ever make.

You evaluated your stage of life and assessed the adequacy of your present home. You calculated how much you could afford to pay for a house and the amount you could afford each month for housing payments. Now you are ready for serious shopping.

Most people however prefer to work with a Realtor or Real Estate Agent, because real estate people usually have a very intimate knowledge of the local market that you may be interested in and could help and guide you to  purchase  your new home.

Real estate agents have their finger on the pulse every moment and feel the beat of the market, they are almost always members of the Greater Moncton Real Estate Board and as such have access to all the listings that are available, plus they have a lot of other information that should be very helpful, such as community information, if you want to know what goes on in a particular community ask your agent. Most agents will introduce you to the Principal of the school, suggest a carpenter or dentist, introduce you to some local community groups that you may be interested in.  In other words; not only could they help you in finding a house, but find you a home as well.

If you have decided to work with an agent meet with him in person and be open with your expectations of what you would like to find, what you intend to pay and when you expect to move.

Finding that right house

What you should do is make a shopping list of items that you absolutely need to have such as number of bedrooms, garage, dining room etc. Also you should have formulated certain areas that you would like to live in like in the Evergreen area close to shopping, etc.

Then you should discuss this with your agent, and give him the opportunity to do his home work so he could take you around and zero in on your request. Remember always talk to him or her so that he or she gets feedback, just like a marriage; the more you communicate the better it gets.

Location, Location, Location

You've heard it before. The phrase is used mostly in reference to property values, both actual and potential. As a would-be home owner you have to consider location in the broadest sense because you are about to invest a lot of money into a property you will probably occupy for some length of time. I personally prefer to sell you an older home versus a newer home if the location is better. Of course you should also take into consideration the total family.

Will my children be close to friends. Will we be able to become an active participant in the immediate community, will my spouse be happy here? Hobbies, and distance to shopping and transportation are important considerations. Weighing these factors will help you determine where you should buy.

New House or Resale?

New and resale houses both have advantages and drawbacks but, as a rule of thumb, resale houses usually cost a bit less than new houses in the same area.

New house characteristics:

• You may have your choice of bricks, siding, tiles, carpets, bathroom fixtures and so on.
• Latest building code, electrical and energy-efficiency standards
• Builder warranty usually available.
• If you insure your mortgage loan on a new, builder-constructed house with CMHC or other mortgage insurance company, there will be a builder warranty on the house because this is required by the mortgage insurance companies.
• A warranty is not required if you build your own house.
• Neighbourhood amenities such as schools and shopping may be incomplete if
  the house is in a  new development.
• The 7% GST applies to new housing. There is, however, a rebate, to a maximum
  of 2.5 %, when a house costs less than $450,000.
• Usually on new streets there is no door to door mail delivery.

Resale house characteristics:

• Established neighbourhood.
• Landscaping and fencing usually done.
• Maintenance costs likely higher than for a new house.
• You will probably want to redecorate.
• No GST unless the house has been substantially renovated and then the tax is applied as if it was a new house.
• You will have to inspect it carefully for structural and other problems such as leaky basements, faulty roofs and so on. If you feel you don't know what to look for, hire a professional inspector to do the job for you.

If you have found this information helpful, fill out the contact form at the top of this page to learn more!