If you’re trying to time the real estate market there can be some exceptional costs you are not accounting for…
…Keith Bray, Sales Representative with RE/MAX Hallmark Realty Group, Brokerage explains.
Here is a breakdown of Keith’s Example.
If you were looking to buy a home around $500,000 in January 2017,
and the Ottawa real estate market rose 5% (it rose 5.5%) a similar home would be asking $525,000 in January 2018,
if the market continued to rise at the same rate (which we expect) similar homes would be $538,125 in July 2018.
On top of the rising prices, the mortgage rules have changed if you applied for a 5 year fixed mortgage of 3.14% in January 2017 for that $500,000 home with 20% down payment you would need a household income of $92,500.
Now with the mortgage stress test you would have to qualify at 5.14% even though your mortgage rate will still be 3.14%. The same household income of $92,500 would only qualify for a home worth $427,000 and if you wanted to purchase that home at $538,125 you would need a household income of $117,500.
Don’t get priced out of the market, chat with Keith today at 613-407-2729
All mortgage calculations courtesy of Cathy MacDonald with Mortgage Brokers Ottawa.
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