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jae} Potential Home Owner Should Do Homework By JULES LOH AP Newsfeature Writer House hunting? And can't de- cide how much you can afford to pay? ® Many a potential home owner trying to figure this one out has finally thrown up his hands and trusted to luck -- with un- fortunate results. But if vou arm yourself with a few basic facts about mort- gages, interest, insurance and other such necessary evils in- volved in owning your own home, chances are you won't bite off more than you can chew. ' A good starting point is the rule of thumb most authorities give: FLOORS & GIRDERS "WATER PRESSURE ELECTRICAL SYSTEM .. ....... Don't buy a house that in- volves borrowing more than 215 times your gross yearly in- come. But that is just a starting point -- an index to guide you to the right housing develop- ments on your Sunday after- noon drives. If you earn $8000 a year, for example, steer clear of the homes that will saddle you with a mortgage of more than $20,000. But when you finally come to the house that has you and your spouse swapping those just-for-us glances, its time to get out a pencil and paper and start figuring. The terms of your proposed mortgage -- the number of years you have to pay it off and the amount of interest involved are the first things to consider. These will determine your monthly payment. Interest rates tend to follow the pace of business activity. When business is brisk and de- mands for money are high, lending institutions generally respond with higher interest rates or demands for larger collateral. Your banker is a good person to consult about the current level of market in- terest rates. Also you must decide which type of loan is best for you. Once you ascertain what your monthly payment would be, the next step is to add to this figure about 414 per cent of the cost of the home per year for property taxes, insurance and upkeep. (The breakdown is about 2 per cent for taxes, up to one- half of one per cent for insur- ance, and about 2 per cent for upkeep). Reduce this figure to a month- "THE OSHAWA TIMES, Fridey, March 28, 1961 ly basis, add it to your monthly mortgage payment, and apply rule of thumb number two; the amount of mortgage payment, property taxes and insurance should not exceed 25 per cent of your take-home pay. In other words, you ought to be able to take care of these three items with one week's paycheck each month. Again, this calls for a closer look. : If property taxes are high in your area, or if you plan im- provements that would push taxes up, or if the home you plan to buy is an older one, you should make some down- ward adjustments in price. On the other hand, if taxes are low and likely to remain low, or if you're buying a new home, or if you're a do-it-your- selfer in regard to maintenance and repairs, or if you can make a larger down payment, you can feel safe in making upward adjustments in price. Incidentally, don't plan to use all your savings for the down payment. There are going to be closing charges on the loan; ap- praisal, legal and survey fees, possibly future taxes and insur- ance previously paid for by the seller, plus moving expenses and other costs involved in ged- ting settled in the new home. Whether the house you aim te buy is a new one or an old one has to be considered in light of the maintenance costs you will be apt to pay. You also can get a good idea of whether your maintenance and upkeep will be heavy orf. light by making a close inspec tion tour of the home. Check for such things as insulation (resulting in lower 'heating costs), adequate sewage dis- posal units, and quality building materials and acces- sories throughout. Good products not only require less upkeep but usually carry their own guarantee. All this checking, investigat- ing, inspecting may seem com- plicated and difficult. But you'll find a lot of it can be done on the telephone, and don't over- look the help others can give. you. Reputable real estate agents and bankers are the rule, not the exception, and will answer your questions candidly. It's a big investment youre making. It pays to be certain it's not too big for you te handle -- or too little to pro- vide all the satisfaction home ownership brings. { advice. WHITBY MO 8-3171 % 4 888d IMPROVE NOW PAY LATER There is no end to the ways you can beautify and-modernize your home. Choose your lumber and other building rhaterials from our complete stock, also profit from our know-how and fred Prompt, Courteous Service Is Our Motto AJAX LUMBER CO. LTD. PICKERING WH 2-3251 saad bdhissaninesnnnuunasd #84888 RABd TS ¥