Choosing the Right Neighbourhood
Becoming a homeowner is one of life’s biggest milestones. For many of us, it requires careful planning and goal setting to avoid things like mounting debt or foreclosure. Fortunately, those risks can be mitigated by making sure your finances and lifestyle support your home-ownership goals. Think you’re ready to buy? Here is a quick ‘home-purchasing-ready’ checklist to help you find out.
No Outstanding Debt
That translates to your car being fully paid off and getting those outstanding credit card payments out of the way. Any extra cash you’re saving can help you pay expenses like homeowner’s insurance and property taxes. Carrying excess debt can hurt your chances of getting a loan and cause unwanted stress during a time that should be exciting.
A High Credit Score
Your credit score is important to your future as a homeowner, and good credit history is a factor many mortgage lenders look for. Having a high score can help secure a home loan with a lower interest rate and put you in a good position for the future.
Your Job is Secure
Ideally, you should plan to rely on at least two years of employment history. While most lenders require a two-year minimum, the more job security you have, the better. Changing jobs or being out of work can be detrimental to your home-ownership goals. In terms of how much you make, it’s best to earn at least three times your monthly mortgage payment.
A Down Payment
Having a sizable down payment demonstrates your ability to save money and many lenders expect you to provide between 10 to 20 percent of your new home’s value. Having a down payment also increases your options by decreasing your mortgage balance. Plus, it gives you an advantage over other prospective buyers, and helps you gain favor with sellers when other offers are on the table.
Starting a Family
Many younger homebuyers are also eager to start a family. If having kids is in your future, consider how it can affect your lifestyle & financial plans. Make sure that your finances will be able to support a mortgage in addition to the expenses that come along with starting and raising a family. Housing value, size, and location are also factors to keep in mind.
Starting a Business
Starting a business is another goal that can affect your readiness to buy a new home. Mortgage lenders will evaluate your business’ financial situation, which can help or hurt your chances of securing a home loan. It’s also important to consider whether you can afford the compounded expenses of your business and your home.
Live Within Your Means
Shopping for a house is exciting. Big beautiful spaces, great backyards and prime locations can tempt you into spending more than you can afford. Overspending can leave you with less money to buy furnishings and keep up with other living expenses. Keeping a level head and balancing your financial and lifestyle priorities is always a good idea!
Did you Check the Boxes?
These are just a few ways to evaluate your home-buying readiness. Understanding your resources, financial situation, and long-term lifestyle goals is important in making the best choice for you and your family. Whether it’s today, next month or next year, come back to this checklist to make sure your first home purchase is a stress-less and option rich process.