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Whats Stopping People from Buying in Today's Market?

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Nora Staffen | 04 Jan 2016, 05:42 PM Agree 0
Down Payments
Many banks and financial institutions had used Zero down as a mortgage option to entice buyers into making the leap into home ownership. For years homes could be bought with no down payment and 100% financing. However in today’s market, this possibility has long been erased from the list of available Financing options. That means every buyer needs a minimum of 5% of the purchase price in order to qualify for an insured mortgage. Those wishing to escape the additional fees of mortgage insurance require a minimum of 20% or more. Combine this with the fact that the length of the mortgages has also been reduced from 40yrs to 25 causing the monthly payments to increase immensely. Fewer buyers actually qualify for this amount without assistance from RRSP accounts or parental assistance. , it is often difficult for potential homeowners to amass that sum of money on their own, thereby preventing them from purchasing a home.
Closing costs
Those who have achieved success in saving the funds required or received parental assistance to qualify for a mortgage, now find out that there are even more fees attached to the price of purchasing a home. Same as the down payment scenario, accumulating the money for closing costs is often difficult for those individuals who have a tight budget. Many of those potential homeowners who are maxed out as far as available cash is considered, simply cannot afford to be hit with another bill…closing costs . Legal fees, property tax, land transfer tax and more will also be required upon the purchase date. Those who did not plan ahead for this may have to walk away from the home they wanted, and wait for additional saving to accumulate.
In many cases, potential buyers simply lack the confidence in their ability to qualify for a mortgage, so they just don’t apply. Reasons may vary but concerns of job security, credit ratings, and the ability to pay mortgage payments on a regular basis are some of the doubting questions that come to mind.
The amount of money a person earns is directly related to the size of the mortgage that they will qualify to receive. If the potential buyer’s income is not sufficient to qualify them for the amount of money they are requesting in form of a mortgage, the mortgage simply will be declined. The fear of not having enough money saved up or the fear of not having a solid budget plan when the bills start to roll in is behind alot of those insecurities.
While the purchase of a home remains one of the top investment options, the uncertainty and lack of savings are enough to stop a potential home buyer in their tracks.
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