Buy now or wait until 2010?

[coolics]

I am looking for some personal advice.

I am in a situation where I filed for bankruptcy 3 years ago and have been discharged over 1 year and 4 mths and have excellent reestablished credit since. I am looking at couple of homes right now where the prices seem to be reasonable and would like to have a place to own as soon as possible.

If I were to purchase a home now, I am being asked to pay board rates which are 1.0% over the `sale rates` on the long fixed mortgages because of my bankruptcy. I can`t qualify for lower terms or even the variable rates. However, I am told that if I wait until next February 2010, I would get the `sale rates` that people receive with perfect credit.

I worked hard over the last few years and saved up by 5%. So the problem is, should I bite the bullet and buy now at the higher rate or should I wait another 10 months to obtain a better rate possible later? What are the chances of the rates going up in by early 2010?
Any recommendations or suggestions are certainly appreciated!

 

[PeterKinchMortgageTeam]

QUOTE (coolics @ Jun 24 2009, 03:22 PM) I am looking for some personal advice.

I am in a situation where I filed for bankruptcy 3 years ago and have been discharged over 1 year and 4 mths and have excellent reestablished credit since. I am looking at couple of homes right now where the prices seem to be reasonable and would like to have a place to own as soon as possible.

If I were to purchase a home now, I am being asked to pay board rates which are 1.0% over the `sale rates` on the long fixed mortgages because of my bankruptcy. I can`t qualify for lower terms or even the variable rates. However, I am told that if I wait until next February 2010, I would get the `sale rates` that people receive with perfect credit.

I worked hard over the last few years and saved up by 5%. So the problem is, should I bite the bullet and buy now at the higher rate or should I wait another 10 months to obtain a better rate possible later? What are the chances of the rates going up in by early 2010?
Any recommendations or suggestions are certainly appreciated!

I`d keep shopping - if CMHC will approve you (as they would have to in order to be approved for any 5% down product) there are many lenders that will offer a fully discounted rate. In your case, realistically, the fully discounted rate will be less of a challenge than the CMHC approval as typically, they require 2 years discharged and 2 year reestablished credit.

That being said, if you have good net worth and a 2 - 3 restablished tradelines for at least a year, with low debt service ratios - CMHC would definatly look at it and if it approved them them, as mentioned above, some lenders will still offer a fully discoutned rate.

Hope this helps,

 

[invst4profit]

With your past record I would wait. This would not only allow you a lower rate but would give you more time to save for a larger down payment. I would not be comfortable with only 5% down.

 

[Dan_Eisenhauer]

Have you ever considered renting to own? It is a program that is perfectly suited to your situation.

Take a look at our website, a link to which appears in my sig file below. If you have any questions, feel free to contact me.

 

[coolics]

QUOTE (CanadianMortgageTeam @ Jun 24 2009, 06:54 PM) I`d keep shopping - if CMHC will approve you (as they would have to in order to be approved for any 5% down product) there are many lenders that will offer a fully discounted rate. In your case, realistically, the fully discounted rate will be less of a challenge than the CMHC approval as typically, they require 2 years discharged and 2 year reestablished credit.

That being said, if you have good net worth and a 2 - 3 restablished tradelines for at least a year, with low debt service ratios - CMHC would definatly look at it and if it approved them them, as mentioned above, some lenders will still offer a fully discoutned rate.

Hope this helps,

Thanks Peter. I am being offered 4.5 for 3 years and 5.5 for 5 years. My broker seems to be confident that CMHC will approve it. My debt ratio is low and my credit score is still above 630. Good reason for my bankruptcy also. This seems to be the best offer I was able to get and I didn`t want bunch of mortgage brokers pulling my credit report either as I heard this does impact your score slightly and adds to the number of inquiries. If you know of any brokers in the GTA region in Ontario, feel free to share.

Regards

 

[coolics]

QUOTE (invst4profit @ Jun 25 2009, 08:52 AM) With your past record I would wait. This would not only allow you a lower rate but would give you more time to save for a larger down payment. I would not be comfortable with only 5% down.


Thanks. I thought so too but my only concern is that if the rates go up significantly higher by next February or March, if my savings of another 4 or 5 grand would make any difference.. considering I would also have spent over 12000 in rent during this period.

I am comfortable with my risk on this as I know I can afford the payments, but it`s just the matter of the rate which will make a big difference whether to buy now or later. If the fixed rates tied to the bond markets are higher than what I am being offered right now, I think it would be best to make the move now know?

 

[coolics]

QUOTE (Dan_Eisenhauer @ Jun 25 2009, 01:08 PM) Have you ever considered renting to own? It is a program that is perfectly suited to your situation.

Take a look at our website, a link to which appears in my sig file below. If you have any questions, feel free to contact me.


Interesting Dan. Never thought of this to be honest. I guess because there is lack of advertising for these type of programs. How does this actually work? Would I be able to purchase the home at whichever point in time during the agreement or do you have to rent for "X" amount of time before even the house can be purchased?

Are you implying that the rates may in fact be lower later than now. Therefore it`s best to rent now and lock in later to purchase later?

 

[invst4profit]

[quote name=`coolics` date=`Jun 25 2009, 02:51 PM` post=`60684`]
Thanks. I thought so too but my only concern is that if the rates go up significantly higher by next February or March, if my savings of another 4 or 5 grand would make any difference.. considering I would also have spent over 12000 in rent during this period.

Keep in mind, depending on the size of your mortgage, you could spend $12,000 in the same time period on interest payments. Home ownership also includes considerable other expenses as well like taxes, repairs, tools and equipment. Plus, if your utilities are presently included in your rent, you will have that additional cost. Will you have to travel farther to work?
All of these "costs" will add up to home ownership being more expensive than renting.
Principal payments toward a mortgage may be less that $3000 first year on a $200,000 mortgage

http://www.c2ventures.ca/mortgage_calculator.html

Do the calculations. Plug some numbers into a mortgage calculator on the net. You may be surprised to find out paying rent may actually be putting money in your pocket compared to home ownership at this point in time.

 

[invst4profit]

http://www.c2ventures.ca/mortgage_calculator.html

Plug some numbers into a mortgage calculator. Financially you may discover renting will put more money in your pocket than owning.
Plus there are a lot more expenses to owning compared to renting that need to be considered.
Taxes, utilities, repairs, tools, equipment, supplies, furniture etc.

 

[coolics]

QUOTE (invst4profit @ Jun 25 2009, 04:02 PM) http://www.c2ventures.ca/mortgage_calculator.html

Plug some numbers into a mortgage calculator. Financially you may discover renting will put more money in your pocket than owning.
Plus there are a lot more expenses to owning compared to renting that need to be considered.
Taxes, utilities, repairs, tools, equipment, supplies, furniture etc.


Thanks. I did do the math. However, to your point, there are some pros and cons to it all. I will benefit from home ownership.