Buying your first home is an exciting time in your life. The prospect of finding the perfect home where you can be comfortable after a long day at work, pursue your passions, entertain friends and family and possibly raise a family is a step not to be taken lightly. Many people mistakenly believe they are ready to buy a home, but haven’t done the right research to recognize if they are truly ready financially, emotionally and maturity-wise. Ask yourself the following questions to figure out if you are ready to buy your first home.
Do you have a large enough down payment and closing costs saved?
In Canada, you need a minimum of 5% of your purchase price for a down payment. On top of that, you’ll need closing costs, which can add up from 1% to 3% of your purchase price. Many people often forget that they’ll need funds for closing costs.
Do you have a large enough monthly budget?
Buying a house can bring significantly more costs over renting. Not just your mortgage payment to consider, you’ll also have property taxes, home insurance, utilities and maintenance costs. Many people are surprised to find out what home ownership truly costs. You also don’t want to push your budget to the maximum, as unforeseen costs could put you into debt and you also don’t want to be house poor.
Do you have a 10-year plan?
Buying a home on a whim is never a good idea. Do you have some idea where you’ll be in the next ten years? If you are newly-married and know you want a family, buying a condo may be a bad idea. If you don’t know whether you’ll stay in your current career or job, maxing out your budget with a mortgage is not a great idea either. Map out your plan and ensure that your life is stable enough to sustain keeping your house for a few years. If living in Markham appeals to you and you are moving from somewhere else, visit there often to ensure this great city is for you.
How is the market?
Right now, the housing market in Canada and specifically Markham is very high. Houses prices are at a maximum, with the majority of the growth happening in just the last few years. Right now we are in what we would call a “seller’s market”. Some analysts predict a crash, which means housing prices could stall or even go down. If you are planning on staying the course in the case of a crash, this may not affect you, but if you are planning on selling in a few years or moving again, buying may not be a great move.
What’s your credit like?
In order to get a mortgage, you need to have a good credit rating. Not just for the banks who will give you a mortgage, CMHC requires that you have adequate credit to obtain a mortgage if your down payment is less than 25%. Check your credit score with Equifax and if it is not up to par, get working on fixing it.
Are you truly ready to buy a home? Contact me for more information.
Sources:
https://www.investopedia.com/articles/mortgages-real-estate/10/ready-to-buy-house.asp
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