4 Things Every Home Buyer Should Consider When Purchasing a Home.

November 18 900x420

Buying a home is one of the biggest financial decisions of your lifetime. This is why it is important to be fully informed before making that decision. After making a decision to get into the home buying market, the natural next step you think to take is to start browsing home listings and contacting your favourite realtors. However, the actual first step in purchasing a home is to find out how much you can afford.

In Canada, new mortgage rules (commonly known as the mortgage stress test) came into effect in 2018. The mortgage stress test determines if you will be able to afford your mortgage should the interest rates rise. The test checks how much you can afford should your financial circumstances change, for example, in the event of a job loss or reduced income.

This mortgage rule was designed to protect borrowers if mortgage rates rise.

While a home buying journey can be a demanding experience, it is also rewarding. Here are a few things to consider before beginning your journey.

 

4 Things Home Buyers Should Consider

 

Financial responsibility

Buying a home is more than just saving for a down payment and paying for a mortgage. Owning a home comes with many costs that should also be considered. Have you saved for your closing costs? Have you considered the cost of insurance and taxes? Do you have savings for renovations or repairs that may eventually come up? Are you financially ready to be a homeowner? These are all important questions to ask yourself in the home buying process. If you have any debt, it is advisable to pay that off before taking on a mortgage. A lower debt to income ratio is best; it gives you enough room in your budget for other expenses and savings.

 

Long-term goals

Purchasing a home is a long-term commitment. Before making that decision, be sure that you see yourself living in that place for at least five years. Home prices appreciate by a small percentage each year. Owning your home for at least five years is the best way to enjoy some appreciation perks before selling. If your plan is to live in an area for only a few years, determine if it makes financial sense to you to purchase a property or consider other alternatives.

 

Get pre-approved

Now that you know you have decided that purchasing your home is your best decision, the next step is to be pre-approved for a mortgage. Getting pre-approved will give you peace of mind because you know exactly what your maximum purchase price is based on your down payment, income and mortgage payment. Pre-approvals also establish you as a serious buyer in the market. At Cambrian, it takes as little as 15 minutes to apply for a mortgage pre-approval online. Once pre-approved, your mortgage rate will be held for 120 days, giving you enough time to find the right home for you.

 

Buying or building

Sometimes you just cannot find the home of your dreams from the available listings. In that case, you can consider building your home. Building gives you design freedom for the home you desire. If you are considering building your home, weigh your options and consider your budget. You can either buy land to build on or buy a home from a developer. In some cases, you may have found the perfect location but a less than ideal property. In that case, consider infill houses. Infill housing allows you to get the location you want without compromising on the age of your home. It is a great option for homeowners who want to live in more established neighbourhoods, as opposed to a new subdivision.

 

If you are a first-time homebuyer, there are many incentives available to you that can make the home buying process simpler and can even save you some costs. Our comprehensive guide to buying a home is also a great resource to get you prepared for the home buying process.

Have more questions about purchasing a home? Check out our home buying and mortgage resources to learn more.