The who, what, and hunh?

[CanadianGuitarist 0]

I've begun looking at three places that I can technically afford. I'll probably wait until Christmas after all and eliminate my debt altogether instead of bringing it with me into a mortgage, however. I realise that all three likely won't be on the market in four months, but they're pretty prototypical of the houses in the area, so I'm not married to them yet.

 

I'm seeing a vast difference in variable and fixed rates. Suggestions? A perk of the fixed is that TD is offering cashback with them, but if my list of furnishings and closing costs comes to about 6000, I can probably save that up on my own. On the other hand, a variable rate seems like a bit of a gamble. The variable rates appear about the same as they did in March, but, I'm not much of a forecaster on these things. I'm seeing a difference of $15-25k in pre-approval from variable to fixed.

[CanadianChris 0]

I can't see rates going up nearly enough over the next 5 years that a fixed rate would be the better option. Historically, you'll pay less in interest with a variable rate mortgage.

 

My wife and I buying a house for my parents to live in next year. We just went to a mortgage broker and got preapproved for 4.2% variable. We were quite impressed.

[Guest Vitamin X]

The economic climate up there is different, I'm sure, but down here in the States, people who didn't get fixed-rate mortgages are getting screwed big-time by a lot of the other mortgage options out there. There's a tremendous housing crisis down here regarding that, so I would approach those variable rates with caution.

[CanadianGuitarist 0]

There's not too much economic slowdown in Canada right now, certainly not to the degree to the south. To that end, I'm beginning to think a rent-to-own might be a more viable option. Both TD and President's Choice both offer stellar variable rates at the moment, but require a down payment. I figure both my down payment and closing cost/furnishing lists would be around 6000, so I'm better off in the long run by getting into a place sooner and paying less on a mortgage by putting something down.

 

It turns out the Broker I talked to was really vague; when he said "I can get you pre-approved for $130k on an $100k home", he neglected to mention that it was based entirely on the ratio of the house's appraisal value compared to sale price. That burst my freakin bubble.

[Guest Vitamin X]

And that won't be the only bubble to be bursting up there, either. Trust me. Stick with a fixed rate if at all possible. Rent to Own is awesome. That'll be the first thing I'm looking for when I graduate and get a job after school.

[CanadianChris 0]

The economic climate up there is different

That's it in a nutshell, really. Canada isn't facing a housing crisis nearly as severe as that in the States, because subprime mortgages make up a comparatively tiny percentage of all mortgages here in Canada, thanks to tighter regulation. And because of the economic downturn, rates just aren't going to increase much anytime soon.

 

Be careful of rent to own. Make sure you have the option to buy written into the agreement, so you can walk away if things don't work out. Also, be aware that you can lose your entire investment if the seller loses control of the house (i.e. through foreclosure).