Buying a house is one of the biggest purchases you will make in your lifetime (next to your car, your kids and your education!) which means it’s definitely not something you want to rush into.
As real estate agents, we want to help you buy your dream home but we also want to ensure you’re ready for the commitment and feeling confident about your decision. That’s why we’ve come up with five things you should ask yourself before you decide to get the ball rolling on the home buying process.
Are you ready to settle down in the city or town you’re looking in?
When you purchase a home, you usually do so with the intention of staying in that area for at least a few years, most likely longer. If you are someone who likes to move around a lot and likes the freedom of being able to “pick up and leave” any time you want, buying a home at this time might not be the best option for you. This is why a lot of people rent when they are first starting out. There’s no pressure to stay since you don’t own the property you are renting.
If you are ready to settle down then buying a home is definitely a good option. Here are a few things you might want to consider when deciding where you buy your next home.
How much money do you have saved?
Buying a home starts with needing a down payment, which is at minimum 5% of the total purchase price of the home. For example, if the home costs $250,000, you will need to have $12,500 saved as a down payment. In addition to the down payment, you’ll also need approximately 1.5% of the purchase price for additional closing costs such as lawyers fees. In the previous example, you’d be looking at $3,750. These savings are required before you even move into the house. They don’t include things like repairs, unexpected fixes, furnishing the home, new travel costs depending on the distance from your workplace etc.
Do yourself a favour and ensure you have a good cushion of cash to sit on as you enter the home buying market.
How much debt do you currently have?
Having a lot of money saved is great but how does it compare to the amount of debt you have? Student loans, car loans, VISA balances etc. When it comes time to get a pre-approval or apply for a mortgage, your debt is a key factor that comes into play in determining the amount you get approved for. It could be the difference between $300,000 and $150,000.
The more debt you can eliminate before applying for a pre-approval or mortgage the better. Plus, you’ll have less to worry about when you start making payments related to the home you’re hoping to buy.
Are you able to do home renovations yourself?
Buying a home that needs a lot of work done to it is beneficial if you can do the work yourself. Otherwise you could run up some large bills hiring people to make the fixes for you. Your ability (or someone you know’s ability) to do the work can help you decide whether or not you would consider a fixer-upper or if you need something that already has the fixings done for you. Naturally a home that needs some fixing will cost less than one that’s done up already but it will end up costing you more in the long run if you aren’t careful!
These are just a few of the questions you might want to consider if the thought of buying a home is one that popped into your head recently. Buying a home is a big (and sometimes daunting!) task but if you take the right steps before jumping the gun, it can help you in the long run.
Have more questions? We’d be happy to answer any questions you may have. Give us a call at the numbers below or email us at firstname.lastname@example.org.