Are You Ready to Purchase a Home?

Low interest rates, low down payment options, great payment plans. It’s a great time to buy a home.

I think buying a home is an excellent option and great investment that is better than paying rent long-term. However, it isn’t for everyone and you must make sure you are ready for this move.

Just thought I would go through some thoughts to consider if you are thinking of a purchase

Are contributing regularly to your down payment fund?

Key point. You must have a down payment and closing costs available for your purchase. Although you can purchase for as little as 5 percent down, you must still have the down payment available plus the closing costs which could include legal fees and disbursements, land transfer tax, appraisal costs, etc.

Get a plan in place to save for the down payment and a target date to reach your goal.

Can I afford this home?

Yes, you can save the down payment and closing costs and purchase a home. However, can you sustain the payments and live a comfortable lifestyle?

You have to consider all of the factors. Not only the mortgage payments, property taxes, utilities, insurance and maintenance for your new home, but also your other bills and expenses. How does a mortgage fit in with your other monthly expenses? If an emergency were to happen, could you cover everything and for how many months?

Obviously, figuring this out requires you to take a good, hard look at your situation.

To start with, calculate your monthly fixed expenses. Next add in variable expenses. Things like your utilities and credit card bill are more likely to change with the seasons and life circumstances. That said, there are financial apps available that can help you track your expenses over time and get a fair idea of monthly averages.

You should also consider how many incomes contribute to the household. A two-income family might be able to save less than a family with only one primary breadwinner because there’s a bit of a built-in safety net.

You also have to factor in your kids. Will you have enough money not only to provide for basic needs, but also some of their extracurricular activities and time with friends? If it’s near the holidays, you’ll want to set aside some money for at least a few presents. Life’s curveballs may hit children hard because they’re not necessarily able to understand what’s going on.

If you have a fair idea you’re ready to buy, but you don’t know exactly how much you can afford, you can get a preapproval in order to have a budget when you go house shopping.

Does Buying a House Make Sense?

It’s important to realize that in addition to being a large financial transaction, buying a house is also a substantial lifestyle decision.

Are you looking to settle down in one area for a period of time or do you see yourself moving around a lot? If the answer to this question is the latter, it may be best to keep renting.

On the other hand, if you plan on sticking around a while, it may make sense to move that rent money into an investment in your own house where you can build equity and eventually leverage that investment into things like property improvements or a boost to the college fund.

Even if you don’t know how long you’ll be staying, it may still make sense to buy because many of you may find that you’re spending an awful lot of money on rent. Rates are still low and you may find that you can buy with a monthly payment that’s just as cost-effective, if not cheaper, than rent.

Maintenance

Another thing to consider if you’re moving in to your first home after renting is whether you want to deal with the maintenance. After all, it’s nice to be able to have the landlord’s number on speed dial when the hot water tank goes out. If it’s your house, these problems are now your responsibility.

On the flipside, the house is yours to do with it what you will. You can finish a basement, do the patio, renovate the kitchen and do anything you want to please you and add pride of ownership. When you own your own home, the choice is yours.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!