Are you ready to spring into homeownership this season? Spring is often a busy time in the real estate market, and it can be a great time to buy as the market becomes more active. However, before you start house hunting, it’s important to make sure you’re truly ready to become a homeowner. Here are five signs that you’re prepared for the journey!
#1 You know where you want to settle down
Buying a home is about more than having the proper finances. You should also be sure you know where you want to live long-term before you spring into homeownership. When you purchase a home, you’re putting a lot of time, effort, and money into the process. This means you should be certain you will be in it for the long haul. Buying a home, then moving two years later, will cost you money for breaking your mortgage terms.
If you’re considering buying a home, we recommend thinking hard about where you want to live. Have you found the area you want to stay in long-term, or do you want to explore other options? Take your time figuring out the right location for you. The housing market will always be here, so there’s no rush to dive into homeownership if you’re not certain where you want to live. When you move into a home, you should feel a sense of happiness and relief that you have found a permanent residence!
#2 Your employment and income are stable
Of course, your financial situation is a hugely important part of your plans to spring into homeownership. It affects your ability to secure a mortgage and make your mortgage payments. Conventional mortgage lenders need to know you have steady employment and income before they will grant you a mortgage. This is because lenders don’t want to finance a mortgage they deem to be risky, which includes borrowers who may not be able to make payments. In order to secure the best product and rates, having consistent employment and money is important.
Of course, some Canadians are self-employed, for instance, and don’t have a traditional paycheck or income stream. These people can still get a mortgage, but they may have to work with alternative lenders who are willing to work with these kinds of borrowers. In any case, you will still have to show you can support a mortgage before you spring into homeownership.
#3 You’re ready to commit to home maintenance
Owning a home is a LOT of work. If you’re currently renting, or perhaps living with parents, it can be hard to imagine how much time you need to commit to maintaining a house. You’re probably familiar with the daily work of cleaning and laundry, but owning a home goes far beyond that. In a rental, for instance, if an appliance breaks or you experience a leaking faucet, your landlord arranges for repairs, usually at no cost to you. If you own your own home, however, you are on the hook for identifying, repairing, and paying for any problems. This is also true for lawn and yard maintenance, or general upgrades you may want to perform. Owning a home means understanding you are the one responsible for maintaining every aspect of the property!
#4 You’ve saved for your down payment
You can’t buy a home without a down payment, so aspiring homeowners must have money saved up to contribute to the purchase of a property. Down payments must be at least five per cent of the purchase price, up to a price of $500,000. After that, you are looking at down payments of 10 to 20 per cent, and sometimes even higher depending on your mortgage type. This adds up to tens of thousands of dollars you need to hand over before you can actually own a home. Serious homebuyers have likely been saving for years to make a down payment on a property. If you are one of these people, you may be ready to spring into homeownership. Remember that the size of your down payment depends on your home’s purchase price and your own situation. However, any down payment under 20 per cent requires the additional fee of mortgage default insurance, which you can read about here.
#5 You can handle market fluctuations
Finally, it’s important for homeowners to be able to deal with changing market conditions. The state of the housing market will likely change throughout your homeownership, which can also impact your mortgage. For example, variable-rate mortgage holders can experience changes in their monthly payments. All homeowners, when they renew their mortgage, may find rates have changed since they purchased their property. You can’t rely on conditions staying the same throughout your lifetime, because you must be able to financially adapt to potential changes. Using a mortgage broker when you buy a home will be a big help here. We can guide you through current market conditions, and how they are likely to develop over the years. This will help you understand whether or not you can handle market fluctuations down the line.
The decision to buy a home is a big one, and we recommend using a mortgage broker to help you make the most of the experience this spring! We can ensure you secure the right product for your needs, and that your entry into homeownership is a smooth one.
If you have any questions about your mortgage, get in touch with me!