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4 -- PORT PERRY STAR REAL ESTATE -- Tuesday, October 3, 1989 Know what you can afford before you buy (From Page 1) These costs may include lahd transfer tax, legal fees, mortgage arrangements, moving expenses, purchase of new furnishings, and ma- jor appliances. In order to determine your maximum downpayment for a par- ticular purchase, additional costs must be deducted from liquid assets. Your primary considera- tion when buying a new home should be "what can I afford to buy." Setting a maximum price range is more.important than simp- ly establishing an upper price limit, since unan- ticipated costs could push you into the monetary danger zone. 'Affordability is determin- ed by the amount of downpayment you have available to defray the cost of the mortgage. Mortgages cover the difference bet- ween the purchase price and what you pay from your own resources. To keep down the interest cost associated with home ownership, it's wise to put down as much of your own money as possible. The first step towards determining a feasible loan amount is to calculate the maximum monthly pay- ment which you can afford. Most purchasers find it necessary to apply for financing from a major len- ding institution. It is the particular policy of the len- ding institution which deter- mines the maximum loan allowed. The primary quideline us- ed by most lending institu- tions is the Gross Debt Ser- vice ratio (GDS). This ratio represents the maximum percentage of gross income which a borrower will be permitted to put towards principal, interest and tax payments. There is an in- creasing trend among len- ding institutions to also in- clude the heating costs of the house in their Gross Debt Service ratio. Should the property involved be a condominium, then the trend is to include principal, interest, taxes, and one half of the common element fees. The Gross Debt Ser- vice ratio requirements range between 28 per cent and 32 per cent. This means you can spend no more than this specified percentage of your income on mortgage payments. : Lenders are not only con- cerned with how much of your income you are spen- ding solely on your mor- tgage, but they also set limits on how much of your income can be spent paying off all your debts. They will look at your car loan pay- ment, insurance premiums, credit cards and any other loans you are still paying off before they grant you a mortgage. They will also consider the availability of other income, and the stability and quality of income. os or " / Lr enternational netueork ut dependent mentber brokers 4 RE/MAX scugog realty iimited 144 QUEEN STREET, PORT PERRY independen* member troker 985-4427 184 OFFICES R THROUGHOUT ONTARIO - MARK PUCKRIN Res.: 705-357-3374 STEVENSON'S POINT Attractive 2700 sq.ft. plus new home overlook- ing Lake Scugog, open concept. Features large bright eat-in kitchen, for- . mal dining room, living room with fireplace, lg. master bedroom with ensuite to walkout to deck, Ig. family room with airtight stove, lg. unfinished basement, has endless possibilities. Located in exclusive neighbourhood Good value at $349,900. for bi AB ne WEAR =i E Sy LOVE NEST Cozy 2 bedroom home with lakeview and handy lake access. Move-in condition. Ideal starter home near Port Perry. $124,900. $158,900. Well kept, 3 bedroom semi- detached home, features 3 bedrooms, rec room, upgraded flooring, fenced yard with shade trees, located close to school. Well worth checking out. 10 ACRES REDUCED TO SELL! Quiet rural setting overlooking miles of forest and farmland. Quality bungalow - 3 bedrooms up and 2 down, full walkout basement, central air, oversized 2 car garage plus detached 32 x 40' insulated workshop. 7 acres of good working land. 10 minutes from Uxbridge. Now $379,000. Vendor has bought, inquire promptly. 45 SEE THE COUNTRYSIDE! Approx. 2300 sq.ft. 'Jacobsen' home located just east of Sunderland on 1 acre lot. 4 bedrooms, 3 baths, main floor famly room, large inground pool with a hard to match view. Pick a sun- ny day and come out for a drive. $224,900. Vendors have bought. i REDUCED FOR QUICK SALE! 3 bedroom house in Port Perry on 70 x 120' lot, features long list of upgrades. A must to see at $164,900. Vendor has bought, don't put off your inspection. NEW HOME ON 3.9 ACRES $199,900. Why compete for housing with Toronto com- muters? This home features approx. 2300 sq.ft. of living space, several walkouts to decks, impressive fireplace in living room, central air, 3 bedrooms, 2 baths, located in pleasant rural surroundings 10 minutes from Lindsay. TOWN, RURAL AND WATERFRONT LOTS AVAILABLE -- Prices vary with location. Here is an example of a formula used to calculate a maximum monthly pay- ment: $60,000 x 30 percent = $18,000 (Principal, In- terest, Taxes) -- $2,000 (Taxes for one year) = $16,000 (Principal and In- terest for one year). For a purchaser who is earning $60,000 per year, us- ing a GDS ratio of 30 per cent would indicate that he/she might be permitted to carry up to $18,000 per year to pay principal, in- terest and taxes. If we estimate that approximate- ly $2,000 will be used for pro- perty taxes, $16,000 is left for principal and interest. By dividing 2 into $16,000 we got $1333.33. That is the monthly payment for prin- cipal and interest payments on a loan. The next step, at this stage, is to convert this monthly payment into the loan which can be carried. Although there are many variations of payment plans, the most common payment plan for residen- tial mortgage loans at pre- sent involves the use of a blended monthly payment (a blend of principal and in- terest) most often designed to liquidate the debt over 25 years (amortization period). The size of the conven- tional mortgage that can be arranged based on the payments you can afford depends on interest rates. It's no wonder lower in- terest rates bring more peo- ple into the housing market and enable buyers to ar- range lower mortgages. This article is provided by the Ontario Real Estate Association (OREA) for the benefit of consumers in the real estate market. OPENING SOON in PORT PERRY COMMERCIAL INDUSTRIAL Call Toll Free RvB PROFESSIONAL MORTGAGE BROKERS inc. ror Purchase Construction Refinance INSTITUTIONAL & PRIVATE FUNDING contact Kenneth P. Reinhardt 668-9922 Whitby Corporate Centre, Suite 201 INVESTOR CLIENT INQUIRY WELCOME Evening & Weekend "Securing Your Best Interest" RESIDENTIAL INVESTMENT 1-5561-9861 CAWKERS CREEK. i Hn Why deny yourself?? Canada Trust Realtor | PORT PERRY DELUXE at a su bedroom plus; brick bungalow; large kitchen; 2 baths; hardwood floors; security system; 2 car garage. Custom builton 1/2 acre lot. Perfect sum- mer or winter living, close to the country. BUILD YOUR OWN MANSION! $115.96. 4.5 acres. Desirable! Smell the air! Think twice but call Earl McDonald. 2 i xk FISHERMAN'S DREAM 3 bedroom home on Lake Scugog, Port Perry. Blood and sweat required. FOR INFORMATON ON ANY OF THE ABOVE PROPERTIES, PLEASE CALL EARL McDONALD 985-3698, 725-1155, or Toronto line 361-0451 per price! 3 Taxes '88