How to know if you’re Ready to Buy a Home

Woman Packing Boxes

Purchasing a home is one of the largest financial decisions of your life, which can be a scary thought. How do you know when it’s the right time to buy a home? Well, it’s different for everyone, and let’s face it – being a homeowner can be expensive. Here are four things to take into consideration before taking the plunge and buying a home

Are you financially prepared? – It’s not just the monthly mortgage payment you’ll have to budget for, it’s everything else in between. Consider if you have enough upfront funds to buy a home saved. This includes money for your down payment, closing costs, repair costs, as well as three to six months’ worth of expenses saved in an emergency fund. There are also costs that you may not have considered yet, such as home furnishings and decorations. You’ll also have to budget in expenses such as the mortgage principal, interest, insurance, utilities, and taxes. Luckily, you can crunch the numbers and see how much house you can really afford. Try out our Home Affordability Calculator to find out what you can afford to buy and what your mortgage payments would be.

What kind of shape is your credit in? – A financial advisor will likely base your mortgage approval upon your credit score and debt ratio. If your credit score is on the lower end and you have a high amount of other debt, you may not be ready to add mortgage payments on top of your existing debt. Take a look at your expenses, spending habits and debt load, and take some steps to improve your credit and reduce your debt ratio before applying for mortgage pre-approval.

Are you ready to stick around? – One of the signs that you’re in the right mindset to become a homeowner is that you’re ready to stay in your chosen neighbourhood for at least five years. When you sit down to explore your options and think about house hunting, you’ll want to consider a timeframe reference point. If you think staying put for the next five years is not for you, you might want to consider renting for a little longer.

Do you have a plan in place for repairs? – Keep in mind that you’ll be responsible for the unexpected repairs in your home. You may think that if you buy a new house you won’t have anything to worry about, but every home will require regular maintenance. You will need to have the ability to make repairs yourself, or have the resources to pay professionals to do them. These types of fixes and sudden expenses can be stressful, and you’ll need to be ready for them both financially and psychologically.