DOLLARS AND SENSE — Cont’d from page 49 The cost of insurance is based on the percentage of the down payment, so the higher your down payment, the lower your insurance premium. “I always recommend that you put down as large a down payment as you can comfortably to reduce the premium that is required,” Lagimodiere says. ‘Comfortably’ is the operative word. She cautions that it’s important to set aside funds for closing costs, such as legal fees and the Manitoba land transfer tax, which is steep — up to two per cent of the purchase price on homes valued at $200,000 or more. Along with moving costs, home insurance and property taxes, first-time buyers may have to buy a lawn mower, furniture and other necessities. And it’s wise to have an emergency fund for unexpected expenses, as well as a long-term retirement savings plan. “You need to think as long-term and realistically as you possibly can,” Lagimodiere says. “Buying a home is extremely exciting and it’s easy to temporarily forget about other expenses, long- and short-term. I feel it’s my job not only to share in the excitement with my clients but also to bring these tough questions to light and get some dialogue going.” At the outset, a financial adviser can help set up a budget and a create a practical plan to save for a larger down payment and associated costs. For example, couples who typically hit up Tim Hortons or Starbucks and go out for lunch on weekdays might sock away $400 a month by brown- bagging lunch and brewing coffee at home. And it’s best to stash that cash in a separate account where it’s not as easily accessible for daily expenses. Lagimodiere also recommends getting pre-qualified for a mortgage well in advance. That way, the current interest rate can be held until the purchase date, buyers will know
I ALWAYS RECOMMEND THAT YOU PUT DOWN AS LARGE A DOWN PAYMENT AS YOU CAN COMFORTABLY TO REDUCE THE PREMIUM THAT IS REQUIRED.
BUYING A HOME IS EXTREMELY EXCITING AND IT’S EASY TO TEMPORARILY FORGET ABOUT OTHER EXPENSES, LONG- AND SHORT-TERM.
exactly how much they can afford to spend before they go house- hunting and they’ll have taken time to consider all the financial implications. “The main thing is prepare yourself as to what this is going to mean to your budget going forward.” POH
50 Parade of Homes fall 2018
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