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Buyers market opens doors to first-timers

It’s true what they say – in today’s world, things can change in an instant. Take the Canadian housing market as an example. It seems like virtually overnight, we’ve moved from a seller’s market to a buyer’s market. In fact, economists at BMO Bank of Montreal are predicting that Canadian housing prices will continue to fall at least through the first half of 2009 with prices dropping the most in big cities, notably Vancouver, and less in rural areas.

For first-time home buyers, one of the biggest challenges is trying to make sense of it all. There’s an abundance of information, and confusing data that leave prospective buyers uncertain about where to begin. Before making the decision to purchase, here are a few things to consider if you want to get into the market and manage home-ownership costs moving forward:

• Practice makes Perfect – before you get the keys to the house, get used to the mortgage payment

• Practice being a homeowner. Consider the time prior to you purchase your home as a dress rehearsal for the mortgage. For example, if you currently pay $800 a month in rent and your anticipated mortgage will be $1,200 why not put the $400 difference into savings? In just one year you’ll have almost $5,000 more for the down payment.

• Out of Sight, Out of Mind – kick-start your down payment with an automatic savings plan

• Everyone knows saving for a down payment can be difficult. One of the most effective ways to save is to set up an automatic savings plan and arrange for a fixed amount of money to be withdrawn from your chequing account and deposited into a savings account automatically. You’ll be surprised how easy it is to adjust to not seeing a larger balance in your account, forcing you to be more cautious with your spending.

• Put together an All-Star Team of Experts

• Your home is the largest investment you’ll ever make. It makes sense to put together a team of knowledgeable experts who can provide advice and help you throughout your house hunt. Include a mortgage specialist, realtor, lawyer and others.

• Know before you Go – get a pre-arranged mortgage

• Finding the perfect home can take months – or just a single day. Once you find it, you will need to act quickly. A pre-arranged mortgage allows you to shop with confidence, knowing how much you can afford to borrow. It also protects you in the event mortgage rates rise (90-120 days depending on the bank with which you’re working) and allows you to move quickly in placing an offer once you find a home.

• When you get Paid, Pay your Mortgage

• Traditional mortgage payments are made monthly, but most people are paid every two weeks – consider aligning your mortgage payment with your paycheque. With more frequent and accelerated payments, you’ll pay a little more each month but pay down your mortgage faster, saving you interest costs over the long term.

If you are just starting to consider taking the plunge, you may also want to get a copy of the BMO First Home Essentials kit – a new guidebook with all the information, tools and resources you need to search for and purchase your first home. You can obtain this kit by visiting www.bmo.com/firsthome or by calling 1-866-240-9920. For all first-time homebuyers, being prepared and informed will make for a smoother transition from tenant to owner.

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