Here are 7 signs that you’re ready to buy your first Home…
1. You have saved enough for the down payment
You normally need to save at least 5% of the purchase price as a down payment. This payment shows that you have some of your own money invested in the house which gives the lender comfort that you will protect your investment. Having the ability to save money is a great first sign you will be a future Home-owner.
2. You have good credit
Having perfect credit is NOT a requirement to getting approved for a mortgage in Canada however, if your credit score is at least 650 – your odds of getting approved are much higher. If your score is at least 620, you may qualify for a mortgage with as low as a 5% down payment. Lenders look at more than just your credit score. If you have NOT missed a single payment in the past 12 months, you are more likely to qualify.
3. You can afford the mortgage payment
The amount of Home you qualify for is tied to your debt-to-income ratio. It’s typically recommended to keep your 'spend' amount no higher than 35% of your monthly income on house-related expenses such as your mortgage, property tax and heating. If you’re renting a Home, chances are that your mortgage payment will be close to what you’re paying in rent. Use our calculator to figure out what your mortgage payment will be and how much you can afford.
4. You have steady employment
If you have been in the same job with the same employer for at least 1 year, a lender will look at this track record as a sign that you’re financially stable enough to have a mortgage. Working at a steady job with an unbroken employment history is a good indicator that you're ready to buy a house.
5. You DO NOT plan on moving to a new city anytime soon
We all dream of living somewhere tropical but in the meantime, purchasing a house is financially a better choice than renting for a long period of time. This is an option if you plan on staying put for at least 3 years. If you don’t have any immediate plans on changing cities then buying is a great option for you. There’s also a chance that the Home you buy today will increase in value in a few years making your Home a great investment.
6. You have kids/kids on the way
If you already have children, you most likely want to settle down into a nice neighbourhood eventually creating networks within the community (ie. babysitters, potential dog walkers, new friends, etc.) Locating a Home within close proximity of a school is advantageous for the kids who can walk or bus, and also for the parents who have peace of mind that their kids are getting to school safely. If you are planning to have children in the future, it is a good idea to keep school zones in mind as well as what kind of Home you plan to raise your children in.
7. You’re tired of renting/having a landlord/noisy neighbours/etc.
Renting is financially and sometimes emotionally exhausting. You are basically paying someone else's mortgage payment while hurting your own bank account and helping theirs. Plus I'm sure you've encountered a noisy neighbour, an annoying roommate and I bet an unreasonable landlord. You have all these ideas to spruce up your place but as a renter, you can't put a simple nail in the wall without getting threatened of losing your damage deposit. If you feel the need/want to upgrade your Home, now is the time to buy. You will feel a sense of accomplishment taking care of and improving your Home. So, get your DIY skills ready.
If you think a few of these describe where you are at in life, give us a call and we can put you on a path to Home ownership.