Thursday, October 19, 2006

Ottawa Housing Payments

Spend no more than 2.5 times your income on a home. For a down payment, it's best to come up with at least 20-25 %.

Many buyers in recent years have stretched the limits of affordability, and have bypassed the traditional 5 - 20 % down model. But make a smaller down payment, and most lenders will require you to have Private Mortgage Insurance (PMI), which adds a minimum 0.5 % of the loan amount to your mortgage payments, about $1,000 more a year on a $200,000 principal.

Your total housing payments should not exceed 28 % of your gross income. Total debt payments should come in under 36 %. These guidelines include payment on all loans, such as school and auto loans and credit card debt.

Also remember to take into account other home-related expenses to judge a house's affordability. Property and school taxes, home insurance and energy costs and requirements can vary considerably around the nation.

Try to estimate future maintenance costs and work them into your budget. Some homes, especially older ones, may require more regular upkeep than homes built with more modern materials. Roofs, siding and heating, cooling, plumbing, and electric services may have to be replaced within a few years of purchase.


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