An overview about when is the right time to buy a house

by admin

Posted on November 9, 2017


buy a house in vancouver

There are several hindrances that we face while embarking on a new adventure and perfection is the enemy of execution. During that time, it is important to remember that things don’t have to be perfect at all times, especially when you go on board on a new venture like buy a house in vancouver, but ask some questions to yourself such that you can fix the time of buying your dream house. When is the right time to buy a home? When this question arises, you need to address some of the fundamental questions like can I afford the down payment? If I put all the money down, will I be able to face any emergency crisis, traveling expenses and food; am I prepared for the extra expenses involved in the process. Get cleared with all these questions, if your answers are a yes, then now is the right time to buy a house. Let’s explore.

  • Down payment for buy a house is a huge cash outlay that needs to be heavily weighed. The standard payment would be 20% of the price you are paying for the home, however, you can increase your DP if you wish to, and scaling down from 20% will make things complicated. Having said that, apart from spending for the down payment you should also spend some cash for appraisals, inspections and closing costs! At the time of closing, these additional costs need to be paid and it can add a few thousands of dollars to your tab, the aftermath of the DP is one of the most important things to take into consideration. What will be left to pay for your other expenditures? There adjoins a slew of additional costs on the back end while you be contended with the purchase of your new house or Selling your new house gastown.
  • As aforesaid standard down payment amount for buy a house is 20% of the price you pay for the home. In order to make the dream of becoming a homeowner true, you may choose to go for less than 20 percent down payment and in this case you will be required to buy mortgage insurance (which is often referred to as Private Mortgage Insurance if the loan is private or PMI). This will help protect the interest of the lender and he/she will be safeguarded by the insurance policy even if you default on your mortgage. Talking about mortgage insurance fees, it may vary depending on certain important criteria’s like the size of your down payment and your credit score. Typically it ranges from 0.3-1.5% of the original loan per year. With that said, the lender has the right to revoke your mortgage insurance, if your loan balance drops to 78% of the home’s value.

Are you planning to go low on the down payment of your house? Read this!

Going less on your down payment is not advisable as a matter of fact because it will lead to further other complications. By paying suggested sum, you immediately own 20 percent of your home, which is called as equity. The more you pay with your cash, the more you own outright. Now let us see the complications of the flipside of this. Higher interest rate on your mortgage and higher closing costs, this will further lead to a higher mortgage interest rate and more money spent during the life of the loan (remember compound interest). Moreover, as aforementioned, in addition to the mortgage, you will also have to bear the extra costs associated with mortgage insurance. Lastly, if you are going to put down less than 20 percent, then the interest on your loan will be higher, so’s the monthly payment and you will certainly have to buy a house in vancouver bc. So, this is where it might make sense to wait for a couple of years or more to save a considerable amount of money for your DP and then go for it at one go.  

Other options to consider when going less on down payment:

When you consider going for a down payment that is less than 20%, there are several other options that you can explore and take advantage of and it includes:

  • VA loans
  • USDA loans
  • FHA loans

The aforesaid loan types are said to help! If you are an active duty or honorably discharged service member, then VA loans are a good option to mull over, the best part about this loan is that it requires 0% down and no mortgage insurance. On the other hand, you can make the most of USDA loans, rural housing loans, aimed at helping low- to moderate-income households; you can also get conventional loans from mortgage lenders or from any bank, last but not the least, the FHA loans, having the most lenient approval requirements, its mortgage insurance will have to shell out for the life of the loan.

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