It's your Home. Don't leave it to chance.
How Much Can I Afford?
Before you go out looking for a Calgary home, you can get an idea of what you can afford by using a mortgage calculator or a bank's finance tools. These handy tools will help you estimate how much mortgage you can handle. Click on your bank of choice on the right to use their mortgage and finance tools.
Another thing to consider is your down payment amount. Think you can't buy a house without a 10% or 20% down payment? Thanks to more lenient government guidelines and new mortgage products, many people can now get into a house for 5% down.
The Benefits of Equity:
Equity is the principal part of your monthly payment that you can use as a down payment on a new home, or collateral for a home equity loan. You can use a home equity loan to finance home improvements, a child's college tuition, or a new car.
Real estate is also a great way to keep a hedge against inflation. While some homes do appreciate in value more quickly than others, real estate usually keeps pace with inflation. In fact, homes in general have been appreciating at a steady 3% a year for decades, although increases of 40%-200% in some regions have been seen in the past 24 months (your Vostner-Bell Realtor can provide you with the housing appreciation rates in the areas in which you're interested in buying)
That Wonderful Thing Called A Tax Break For Home Businesses:
Many home-business owners overlook the fact that a percentage of many household expenses can be written off at tax time. Of course, there are exceptions to this: you need to have a separate office space to be able to take the deduction (if you have a desk set up in the corner of your bedroom or kitchen, you can't write off the space for your entire bedroom or kitchen)
So look at what your monthly mortgage payment will actually be, taking your tax breaks into consideration. You may find out it's about the same as (or sometimes even less than) a rent payment!
With a 5% down payment, a $100,000 30-year mortgage loan at 8% interest (8.15% APR) requires a monthly principal and interest payment of $733.76. Assuming a 28% tax bracket and $150 for monthly property taxes, the after-tax monthly payment would be about $615! (this is only an example. Please consult with a tax advisor regarding your own tax situation and current tax laws.)
Pre-Qualification vs. Pre-Approval:
Pre-qualification is just a guesstimate of how much you could afford. But with a pre-approval, it's just that: getting your mortgage approved prior to going out and looking for a new home.
Your loan officer will show you which items you should bring to apply so neither of you will need to wait for various written income, asset and liability information.
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