Buying your first home comes with so many emotions – excitement about a new chapter, pride for owning your own home, but there are also the nerves about payments and unknown. Doing a little pre work will help alleviate some of those unknowns.
It’s important to consider not only what you can afford right now, but the future. What will you be able to afford if a baby comes along, your career goes off track or your house needs some major repairs. Here are four key pieces of advice before buying your first home.
Get a real pre-approval
Using online pre-approvals can seem quick and easy, but they don’t consider a lot of important factors. A trusted Advisor will factor in your credit score, a thorough analysis of your income, the amount of your down payment, value of assets and investments, among other things in their pre-approval process.
Know your finance numbers
Understanding your finances is a key step in the process. You don’t want to stretch yourself too thin where you have no wiggle room. To make your home buying process work, you need to ensure you have the resources available to handle the inevitable extra costs. I.e. property taxes, regular repairs or an emergency need like a new furnace.
Future proof your decision
Think about your future, what could the next five years hold. If you’re thinking about kids, consider factoring in daycare payments, or maybe your vehicle is getting old and it’s time for a new one, that’s additional monthly payments.
Don’t worry about hitting the 20% down payment
If you’re unable to come up with the 20% down payment, that’s alright. With the approval of Canada Mortgage Housing Corporation (CHMC) or Genworth you can put down as low as a 5% to 10% on most home purchases. Opening a Tax-Free Savings Account can help you manage your saving while earning interest on your money. First time home buyers also can use RRSPs to pay for their down payment. Purchasing a home is one of the biggest most rewarding financial investments you’ll make in life. Get in touch with one our Advisors today so they can help create a plan to get you your first home.