Do you have plans to purchase a home in the future? Whether you’re hoping to make this move next month or in two years, you likely already have home buying goals in mind. Maybe you’re dreaming of a specific location or a big budget, but before you get ahead of yourself, it’s important to know if these goals are realistic.
It’s easy to fall into the trap of chasing unattainable dreams, but this is something you should try to avoid as a potential home buyer. It’s important to keep your goals clear and realistic to give yourself the smoothest experience possible. Here are some areas of the home buying process where you should focus your goals.
Debt
Do you have any existing debts? If you do, don’t panic! You can still buy a home with debt. Many people have some form of debt, whether it’s student loans, credit cards, or car payments. This doesn’t mean you can’t qualify for a mortgage. You will need to show you’re making consistent and timely payments. Sometimes the amount of debt isn’t as important as how well you can handle it.
You can also work towards reducing your debt before you enter the housing market. If you’re struggling with your debt levels, you may want to lower it before applying for a mortgage and buying a home. This will make your experience easier because many lenders will hesitate to approve a mortgage if they don’t think you can handle additional debt. You can take a look at some tips to be debt-free from the Government of Canada here.
Down payment
You should determine how big of a down payment you want to save for your home and how much money you need to achieve that amount. Are you hoping to save five, 10, 15, or 20 per cent? Your down payment will determine your future mortgage payments and whether you need mortgage insurance. Your goals will vary depending on how big your down payment is, as well as if this is your first time buying a house.
If you’re a first-time home buyer, you might be able to take advantage of the First-Time Home Buyer Incentive. This program is a shared-equity mortgage with the Government of Canada, allowing buyers to secure a smaller mortgage with a larger down payment. This program helps Canadians achieve their home buying goals while also taking some of the stress of saving for a down payment away. Usually, the government contributes five percent to your down payment. However, if your home is over $1 million, remember you need a 20 per cent down payment no matter what. This is important to know so you can plan accordingly!
Budget
Of course, buying a home means you will have some big goals for your budget. This is a super important point to address because your budget will depend on a lot of factors. Your income, current debt levels, and location will all come into play, and every buyer’s budget is different. It’s best to know your budget before you start house hunting, so you don’t end up looking at homes you can’t afford. This will likely just result in disappointment for you and will waste your time. In this busy market, you need to have a clear budget in mind, and stick to it.
Timeline
Another home buying goal to address is your timeline for moving. Do you plan to move in three months, one year, or even further down the road? Are you moving from another home, or from a rental unit? Are you relocating for a job? It’s important to have clear goals for your timeline so you know how soon you need to hit certain targets. For example, if your goal is to move within six months, you should start looking at getting your pre-approval, meeting with a broker, finding a real estate agent, etc. Your timeline also has to be attainable. Don’t try to rush the process, or you might feel pressured to buy even if you’re not fully committed.
Credit score
Credit scores are interesting because while you should keep your score as high as possible, you don’t need an 800+ score to buy a home. People with credit scores above 660 often qualify for mortgages, so your credit goals should revolve around what is most attainable for you. However, lower credit scores often have higher interest rates. Since lower credit scores are considered higher risk, lenders usually bump up interest rates to protect themselves. You can also read about how your credit score affects your down payment here.
Expert help
Finally, be sure one of your home buying goals includes getting the help of a mortgage professional! Using a mortgage broker is one of the best ways to ensure you can achieve all your goals and find the best mortgage product for you, and therefore the best home. Brokers walk you through the entire process from start to finish, helping you find lenders and complete the necessary paperwork. They take away a lot of the tricky aspects of buying a home, so you can focus on finding the perfect house to meet your goals.
Purchasing a home is exciting, but if you don’t know what your home buying goals should be, it can get confusing. That’s where I come in! If you’re interested in buying a home, get in touch with me.