How much home can you afford?

[Joe Crawford]

One of the most common mistakes that Canadian homebuyers -
particularly first time buyers -- make is starting out at the wrong
price level. Prospective buyers have a tendency to get 'hung up' on
the sale price, but the monthly carrying cost is what really counts.
These buyers arbitrarily pick a figure - giving their salesperson
instructions like, "I don't want to go above $300,000" - without even
knowing what that figure carries for in weekly payments at current
interest rates. It's surprising really, especially considering that a
home is typically the largest investment a person will make in their
lifetime. Yet, there are still some buyers who don't even know what
their payments will be until after their offer is accepted and their
financing is being arranged.

You might also be surprised at how many buyers have allowed their
'dream home' to pass by, because they didn't want to venture a few
thousand dollars higher than their own arbitrary price ceiling. If
they'd 'crunched' the numbers first, they might have learned that they
could have carried that home for less than they were currently
renting. Or they could have covered the difference for a very minimal
amount, perhaps less than one take-out meal each week. The bottom
line is to know what weekly payments you can afford, and work out from
that point. And during negotiations, to understand how any change in
cost translates into ongoing carrying costs.

Even experienced buyers who are selling their current home to buy
another frequently get caught up in the same kind of 'final price'
mindset. If you're looking to upgrade to a better home, you need to
focus on whether you can afford the additional expense of the new
property versus your present home. It's the gap between the two
prices, and what it carries for that you should be focusing on, not
just the sale price.

Here's where your Coldwell Banker (R) professional can help --
estimating the proceeds of your sale, providing advice on keeping
carrying costs low and helping you lock in a favourable mortgage rate
before you buy.

If you're not sure what price range you can afford, your Coldwell
Banker representative can calculate that for you in advance, based on
your available down payment and your income. You'll know at the outset
what your payments will be. We'll listen to your goals, identify your
needs and offer creative financing solutions to help you get where you
want to be. Best of all, there's no cost or obligation for this
service. Your Coldwell Banker professional will work with you to help
you realize your dream of home ownership - at a price you can afford!


Joe Crawford
Real Estate Sales Representative
www.kitchener-waterloo-homes.com