What Should I Buy

Should I buy a home or build one?

If you can find an existing home in an area you like at a fair price, you are better off financially to purchase an existing home. New construction is very expensive these days and you must pay HST as well. Most contractors in the industry are in high demand and expensive. There is a lot of stress involved in building a home. You can rarely get your money back in the re-sale market unless you live in the home for quite a few years.

Should I buy a house or mini-home?

There are 2 important questions to ask yourself here

• How much home can I buy with the money I have saved?
• How much will my new home increase my monthly expenses?

Even if you have a lot of money saved to put down on your home, your monthly increase in expenses could put you over your budget. For example:

Increase in Monthly Expenses

• Property Taxes - calculated as a rate per $1000 of the assessed value of the home
  
  example:$50,000 home is $1.25 per $1000 so $50,000 X 0.0125=$625/year
  most people add this onto their mortgage payment
  
• Higher heat & power costs - if you are used to an apartment’s cost
• House Insurance - $30-$40/month approx.
• Water & Sewer costs if in town - $30/month

Your mortgage broker or banker will help you determine what your monthly mortgage & property tax payment would be.

Important factors to consider

• mini homes are much cheaper to purchase (new or used) than houses
• houses usually appreciate (go up) in value over time while mini homes usually depreciate (go down) in value over time
• many neighbourhood covenants won’t allow mini homes
• mini home park is an option instead of buying land – Approximately $170-200/month pad cost
• mini home parks have very small lots and not much privacy

How Repos Work

There are 2 types of repossessions on homes: a tax sale and a mortgage sale.

A tax sale is related to overdue property taxes. Taxes are billed in March for that year. If any homeowner is late paying these taxes by a year, the government will announce a tax sale. That is when you see an ad in the newspaper about the tax sale for that property. The owners are given a deadline to pay the bill (+ hefty interest fees and late payment fees) and if it is not paid by that date, they hold an auction for that home.

A mortgage sale is related to late mortgage payments to a financial institution. Once the payments have been in arrears for a specified amount of time, they will announce a mortgage sale in the newspaper. The owners are given a deadline to pay the bill (+ hefty interest fees and late payment fees) and if it is not paid by that date, they hold an auction for that home.

How the auction works

There will be a minimum reserve bid for the repossessed home on auction day. If no bid reaches that minimum price, the home is not sold at the auction. The home then gets listed with a real estate firm and is sold like every other home on the market.