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Real estate transactions: How much downpayment is enough?

Having a minimum downpayment to buy a home is necessary. But, would it benefit Alberta residents in their real estate transactions to have as much saved as possible when purchasing property? More importantly, should people postpone buying until they have as much saved as possible? There are financial considerations for buying sooner and for buying later and much has to do with saving for eventual retirement.

Having more for a downpayment means carrying less of a mortgage and extra cash on hand. However, some of that money can be put into the pot for retirement savings. Putting money toward a downpayment may mean a person can't begin to save for retirement until he or she is in his or her 30s or beyond. But there is also the issue of having to pay mortgage insurance on a 10% downpayment.

Experts says people need to keep in mind, too, that as they are saving more, home prices are also increasing. The decision whether to buy now or to wait for an additional downpayment depends largely on market conditions. If real estate price growth is low as are rents, a prospective purchaser may wish to wait. If rents are escalating, interest rates are low and home values are appreciating quickly, buying sooner may be the best bet.

Real estate transactions are fuelled by what the market is doing at any given moment. A lawyer may be able not only to assist clients with closing deals, but to make recommendations regarding other issues that may affect deals such as downpayments. An Alberta lawyer can play an integral part in the transactions of both buyers and seller.

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