11/10/2010

Trip to See a Mortgage Broker

I've talked on and off a lot about our plans to buy a house eventually.  We are currently so torn between buying my Great Aunts home (whenever she's ready - at an as of yet undetermined time) and buying a new construction home.

When I wrote about this in November last year, we had a list of things we needed to accomplish before we could seriously think about it.  I'm pleased to see that we're well on our way to accomplishing all of these things.  We've paid off all of our debt and managed to increase Jordan's credit score by around 100pts.  We are sitting in a very good position to buy a home - we now  need to increase our down payment - it's the last step!
  • Jordan's truck loan is paid off
  • My student loans are paid off
  • Jordan's credit score is higher
  • We have money in the bank!
We went to see a mortgage broker over the weekend, and brought him our credit reports & scores from equifax.  We didn't want to actually get pre-approved, so there was no need for him to do a hard inquiry which would show to all lenders in the future, but we wanted to show him the hard facts so we could have a realistic conversation.

The broker was so helpful!  He informed us that based on our incomes and credit scores we would have no problem securing a mortgage between $300-350k, which is what our plan was (how perfect is that).  He did say that we could probably stretch it to $400k if we had a 20% or better down payment - but that's not in the cards.  Jordan and I also don't want a mortgage that big - so not a problem.  

We ran some scenarios with him that included purchasing my aunts home or a new build, and both seem really possible.  He told us that the benefit of buying a new home is that the builder will absorb the closing costs, GST and other legal fees.  The price of the house - is the price of the house.  If we buy my aunts home, we'll have to pay closing costs as well as GST (gross) - depending on how it all comes together.

Speaking of how it all comes together, he said something we could do to avoid the down payment altogether is put my name on the title of the house, then re-finance it for the purchase price.  We would then take my aunts name off the title, and give her the money.  We hadn't heard of that idea before - and it would really help because then we'd have all the down payment money available to use for much needed renovations.

Right now, Jordan and I are so so so torn on what is best for us.  We're ready to take our lives to the next stage and that stage doesn't involve roommates.  We know we want to have it all sorted out before August, so that we come home from our honeymoon and are in our new space.  

What would you do?  What questions would you ask yourself?
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8 comments:

  1. That's really tough. It sounds like you guys are in a great place to buy a house, and have a great opportunity with your aunts place.

    For us, we heard over and over and over again not to buy a house during the engagement/1st year of marriage time. We weren't really planning on doing that anyway, but the fact that like, TEN PEOPLE told us that made it really stick in our minds. Even though we already live together and have some finances merged, we don't want the stress of buying (and fixing up) a house during our first year of marriage.

    Also, now that we are 3 months away from the wedding, our apartment is a total disaster. I couldn't imagine having a house to take care of right now!

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  2. Just a note - you DO NOT pay GST when buying an existing house (a used home if you will) - so if you buy your aunt's place, there would be no GST. What you may have to pay, depending on provincial rules, is a land transfer tax, which sucks. You will pay GST on all services associated with buying a home - agent, inspector, lawyer etc.

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  3. @ every little kiss - isn't that interesting...I feel pressure to buy a home and get organised before getting married.

    @ Jenn - thank you for the clarification!

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  4. Where did the broker get the lease idea? She doesn't have a lease????

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  5. Congrats on resisting the urge to take a bigger mortgage simply because you qualify!

    Yeah I don't understand the lease bit. Are you in the U.S.A?

    A note on a new house - my parents bought one a few years ago. Home builders cut all sorts of corners, so getting them to come back and fix things that are in the warranty is like pulling teeth...on a wild hog. Luckily they're retired so have all the time in the world, I'm not sure I'd have the time or energy - it took TWO years to get the right chandelier put in (the one they paid extra for), etc.

    @everylittle kiss - everyone tells you to buy a house b/c that's what you're "supposed" to do, but they don't think about the why and how. Buying a house puts a lot of stress on a little marriage (I'm only 2 years married) when you're still trying to figure out how each other works, from being a morning person, to chores, to managing money.

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  6. @ mom - whoops, I didn't mean lease - I meant title....

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  7. Hi, I am so glad I found your blog. It's very inspiring and I can't wait to read your past entries! I just started getting into PF, hence the brand new blog, but I am already so inspired by everyone. I hope to be able to save just like all of you! I'm going to add you to my links if you don't mind.

    Also how do you get those tracking bars on the side? I tried searching but I can't figure it out! It's too cool and I definitely need some of those to help motivate me.

    Thanks,
    Erika

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  8. Heh I was just coming here to talk about the no GST on existing houses thing, but Jenn beat me to it. :)

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