Buying your first home is a huge decision and one that should not be taken lightly. Many people have different opinions about when is the right time to jump into home ownership but the truth is, it is a very personal decision. Working with first time home buyers is actually one of my favourite parts about being a Realtor. I love the process of sharing information, assuaging fears, and demystifying the process. Here are a few tips that might help you as you consider buying your first home.
1. Understand your current financial situation
Take the time to sit down and get to know your income versus expenses as well as your income to debt ratio. Take a look at your bank statements for the past year to really grasp where your money is going. I know it seems tedious but doing this will help you to objectively evaluate your expenses, determine how much you have to spend, and will also identify areas where you can realize some savings.
2. Get preapproved for a mortgage
Find a great mortgage broker and start the preapproval process. Your mortgage broker is going to love the work you have done on understanding your financial situation. Find out how much you can afford to spend on a new home. This will help to focus your home search.
3. Take a look at your life
Are you planning on staying in the same city for a few years? Do you have a fairly consistent and reliable income? Will home ownership improve your overall quality of life? If you answered “no” to any of these questions, then it may not be the right time to buy a home.
4. Get ready to raid your piggy bank
You will need to have money saved to put towards your down payment. As a first time home buyer, you may be eligible to use some of your RRSP savings. The Canadian federal government created the Home Buyer’s Plan which allows first time buyers to access their retirement savings without penalty. This program does have limitations and conditions so be sure to review your options with a trusted financial advisor. You can also use personal savings towards your down payment. If you do not have any money saved, then it may not be the right time to buy a home.
5. Get comfortable with having extra expenses
Home ownership comes with countless additional expenses that you may not encounter as a renter. Property taxes, community fees, home insurance, and repairs are just a few of the things that you will be responsible for. Figure out if you can absorb these additional expenses without creating financial hardship for yourself. If you can, great! Home ownership might be the right choice for you.
These are just a few things to consider when you are making the decision to buy a house. You do not need to make this decision on your own. Find a great Realtor to work with. I have plenty of tips, tricks, ideas, and strategies that can help you make the best decision possible. Contact me today for more information.