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Old 02-08-2012, 03:47 PM   #21 (permalink)
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You can write off mortgage interest(I use to get no tax return, now I get a buttload).

Steve
In Canada, you cannot write off mortgage interest. Just one of those things I wish Canadians had like the US.

However, if your home is also your place of business, you might be able to claim some of it as a business expense.
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Old 02-08-2012, 03:57 PM   #22 (permalink)
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well...i've never really thought about it in too deep because like i said, i only just started thinking about the financial part of buying a house before actually looking into what i wanted. but i think ideally, i like the "bachelor" design of the condos. 1 master bedroom, 1.5 bathrooms. would want a garage or underground parking. good parking outside the area (so i guess that excludes downtown). if i were to go townhouse i'd like it to be detached. house parties get kind of rowdy when they happen, don't want anyone banging on the wall telling me to shut up. i'm not really sure what else there is to consider even though i know there's tons of options.
What could you live with for 5 years. Make that would would you LIKE to live with for 5 years? With a salary of $45k and a good down payment you'll qualify for a fairly high amount. Probably $250 +- $50k...

I haven't been in edmonton enough to know the areas, but if you bought a fully detached home in an area with older homes that is being revitalized, you can make a lot more money and have some fun reno'ing the place yourself. Depends if you're into reno's though. I'm more of a car guy but house construction is easy, finding a place with good property and a good structure can make you a lot of money. Rona has 50% off one item days, you can buy all your flooring in one day for 50% off, wait and do the same thing a few months later, etc.

Here's the math side of it.

Typical clean 1-2 br condo-rental in Edmonton is what, $1200 a month? Plus utilities, renters insurance, etc.

If you can find the same unit as a townhome for $250k, the principal interest and taxes would be the same thing (assuming $15k down, 3.19% interest 5 yr fixed (I'm paying 2.15%), 30 year amortization, and $200 a month taxes).

At the end of 5 years you'd have the place paid down to about $215k, and assuming it only sold for enough over the $250k to cover real estate fees, etc. you're $15k has still turned into $45k over the 5 years. In actual fact the $250k townhome could be worth $350+ 5 years from now (who knows in Alberta) and then you're laughing all the way to the bank.

I know my results aren't typical, and I got lucky with a work relocation covering real estate fees, etc., but I made $50k in less than 3 years on my house in Ontario. That was a $236k house to begin with and I had NOTHING to put down.

Here's some calculators to get you started: First National LP - Residential Mortgages - Mortgage Calculators
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Old 02-08-2012, 04:06 PM   #23 (permalink)
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No i understand the whole RRSP and TSFA ordeal, i did a fair bit of research in that as well. You might already know this but you can also pull your RRSP out tax-free IF you go under the first home buyer's "act" i guess you can call it. which is basically you being able to pull out your RRSP and put it directly into a downpayment for a house without any tax penalty, you do have to pay the interest on it though but it's over the course of 15 years, so it's next to nil.

So come tax season, you can drop a lump sum into RRSP, go below the tax bracket so you get an awesome amount of $$ back from the government and then pull out the RRSP and use that for your down payment + whatever you get back from the government for your new home...*BOOM*. of course easier said than done...
For the HBP, you don't pay interest on what you owe but you lose out on any gains you would have made. 25K (maximum) compounding over the duration of the years of paying it back, is quite a bit of money you could have gained. I used it but didn't have to start paying back yet. From what I understand, during tax season, the minimum payment (what you took divided by 15) from the HBP is just added on as income. So you need to contribute at least that amount to your RRSP. If you don't you just pay tax on it as if it were your income.
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Old 02-08-2012, 04:13 PM   #24 (permalink)
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What could you live with for 5 years. Make that would would you LIKE to live with for 5 years? With a salary of $45k and a good down payment you'll qualify for a fairly high amount. Probably $250 +- $50k...

I haven't been in edmonton enough to know the areas, but if you bought a fully detached home in an area with older homes that is being revitalized, you can make a lot more money and have some fun reno'ing the place yourself. Depends if you're into reno's though. I'm more of a car guy but house construction is easy, finding a place with good property and a good structure can make you a lot of money. Rona has 50% off one item days, you can buy all your flooring in one day for 50% off, wait and do the same thing a few months later, etc.

Here's the math side of it.

Typical clean 1-2 br condo-rental in Edmonton is what, $1200 a month? Plus utilities, renters insurance, etc.

If you can find the same unit as a townhome for $250k, the principal interest and taxes would be the same thing (assuming $15k down, 3.19% interest 5 yr fixed (I'm paying 2.15%), 30 year amortization, and $200 a month taxes).

At the end of 5 years you'd have the place paid down to about $215k, and assuming it only sold for enough over the $250k to cover real estate fees, etc. you're $15k has still turned into $45k over the 5 years. In actual fact the $250k townhome could be worth $350+ 5 years from now (who knows in Alberta) and then you're laughing all the way to the bank.

I know my results aren't typical, and I got lucky with a work relocation covering real estate fees, etc., but I made $50k in less than 3 years on my house in Ontario. That was a $236k house to begin with and I had NOTHING to put down.

Here's some calculators to get you started: First National LP - Residential Mortgages - Mortgage Calculators

a man cave, an xbox, a great built in bar, theatre sofas, a 200 in 1 shower and a great kitchen stove. haha but in all honestly, i have no idea. that's something that will take more time to figure out than just overnight.

definately not a construction kind of guy. i love working on my car, but when it comes to homes, i like it to be modern and new. i don't wanna fix anything up. just wanna move in and bam, done. i like the new modern look of condos too. i like the marble counter tops. the dark oak hardwood floor, the accented walls. but mind you, that's all cosmetic furnishings. i don't think home would be too bad if it were close to my parents still. moving out is gonna be pretty lonely, no one to live with. can't get a dog beacuse i dont' have time nor the effort to take care of another person (can barely take care of myself for that matter).

and i'm confused by your statement: " the principal interest and taxes would be the same thing ", the townhouse would be more expensive than the condo, no? or is that what you're referring to in comparison to the townhouse at $250k per se?
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Old 02-08-2012, 04:31 PM   #25 (permalink)
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Never a bad idea to step into the real estate market early.

I was lucky in that my whole family is real estate oriented: appraisers, bankers, renovators, agents, etc.

Real Estate is not rocket science, but it is a lot of work.

If you're in Canada, hit the MLS website and shop. Go to Open Houses, drive around. I saw 43 houses (not counting what I saw on the Interweb) in 3 months before buying my second house. After 3 months, I could tell you the asking price of most places within $5000 and what you could expect to find inside (hardwood, high-eff furnace or medium, walk-in closets, etc.) Ask to see utility bills

Go talk to a mortgage broker. Pick their brain, find out everything you can. Use their online calculators to play with rates and downpayment sizes.

Hit the internet and find a good lawyer's website. A lot of them have pages devoted to first time buyers and all the various costs, things to ask, etc.

Think of it as school course, take a semester to learn.
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Old 02-08-2012, 05:05 PM   #26 (permalink)
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and i'm confused by your statement: " the principal interest and taxes would be the same thing ", the townhouse would be more expensive than the condo, no? or is that what you're referring to in comparison to the townhouse at $250k per se?
Principal and interest on a $235k mortgage at 3.19% over 30 years is $1012. Add in $200 a month property taxes and there's your $1200 a month for housing. When comparing owning to renting, use PIT as the number to compare to.

My $300k mortgage at 2.15% over 30 years is $1130 plus about $175 a month in property taxes (airdrie's pretty cheap). That means my house costs $1305 plus utilities and insurance. There's no way I'd find a 1600 sq foot fully detached house with a 2 car garage, quartz counters, hardwood floors, etc. etc. etc. to rent for $1300 anywhere near Calgary. I looked at you're talking high teens or more like low $2000+ a month prices for an equivalent home.

So my monthly costs are actually LESS than if I was renting, and the kicker is that at the end of it my $50k that I put in might be worth $150k in 5 years. If I decide to reinvest in a house at that time that's my choice, I could take the money and invest elsewhere or whatever.

There is risk of course. I'm on a variable rate at the moment, and locking into the 3.19% fixed that my mortgage company offers right now would raise my payments by $160 a month. If interest rates shot through the roof I wouldn't be able to afford my house. At 3.19% I could easily hang onto it for 5 years and hopefully pay down enough over that time to get out without losing money, but again I will have had a place to live for 5 years so even the risky.

There's always the chance that we'll get a major correction like the states got too. My $50k could turn into negative $50k in the case, or worse... The main thing is with an investment you have to be prepared to ride out the lows and highs. Buy low (*cough* like right now) and sell high (*cough* like peak of another Alberta energy boom which is predicted to happen for the next 6-7 years at least).
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Old 02-08-2012, 05:09 PM   #27 (permalink)
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how old when you bought your first house? if you don't mind me asking
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Old 02-08-2012, 05:24 PM   #28 (permalink)
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how old when you bought your first house? if you don't mind me asking
I was 26 or 27, my buddy was 25 and he's trying to sell his now. He bought a dump though and put a lot into it, I think he's going to have trouble getting what he wants for it (asking way too much I think).

I remember being a bit wigged out about it at first but it's nothing really... That's why I say have fun with it! Realtor.ca is a great place to start, it'll at least help you narrow things down to a rough price range and feature package that suits your needs. And a pre-approval can tell you if you can afford it or not.

Yeah I think my salary was $47-48k when I bought my first place for $236k and I was a little wigged out, but with todays interest rates that's actually a cheap house.
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Old 02-08-2012, 06:02 PM   #29 (permalink)
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what you qualify for and what you want to pay are usually completely different.

what I've been going by is dont pay more than 1/4 of your monthly income on a monthly payment for a house, that way you still have money for a savings and doing fun things and eating good food, you know "living life"

Seems like most people buy the max and get more house than they really need.
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Old 02-09-2012, 09:02 AM   #30 (permalink)
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what you qualify for and what you want to pay are usually completely different.

what I've been going by is dont pay more than 1/4 of your monthly income on a monthly payment for a house, that way you still have money for a savings and doing fun things and eating good food, you know "living life"

Seems like most people buy the max and get more house than they really need.
that's like with cars too, some people go over the top just to have something they don't need, yes it's nice to have but in the end they're paying way too much for something you don't need.
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