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How to improve your purchasing affordability

The reality is that a possible reduction in home prices is outside of anyone’s control. People looking to buy a home, especially first-timers, should remember the following seven tips which are in their control to improve their purchasing affordability:

1. Consider buying an owner-occupied home with a basement apartment as there are lenders who will use this rental income;

2. For the down-payment, gifted money from family members can be used;

3. Another way to raise the minimum down-payment is to use RRSP savings (up to $35,000 per person). It’s often forgotten that you can take an RRSP loan to effectively reduce your taxable income and use the tax refund to help pay-off your RRSP loan. If this strategy is utilized over a few years, it is amazing how RRSP savings can grow;

4. To improve the debt funding ratios (i.e. GDS and TDS), you may want to have a parent go on the deal as a co-signor;

5. If you can wait, defer a car purchase and the ensuing car lease or car loan until you have purchased your home. A $500 per month car payment can impede your ability to qualify for a mortgage;

6. A quick way to improve your credit score is to ensure that your credit card balances are not at the limit amount. You should aim to have your balances at no more than 50% to 67% of the limit. And whatever you do, make sure you at least make your minimum monthly payment;

7. Consider buying a home that isn’t a turnkey home. You pay a premium for buying a home where everything is done. If you are handy and able to make minor home improvements yourself, you can really improve your home and turn it into your dream home.

If you have any questions about homeownership, please contact me at (289) 314-8786.

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Steve Tallo
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