Whether you’re dating, married or in a long-term relationship, buying a home together is an important milestone. It represents the beginning of a new stage in your life. As a couple, it can help solidify your bond and creates an opportunity to build equity together. Buying a home requires some significant financial commitment upfront. Then ongoing payments until it is paid off. WOW, that sounds a bit overwhelming, right? Well don’t let that scare you, buying your first home is great for anyone who wants to stop renting and wants to start paying themselves.
The amount of money needed to buy a home varies depending on where you want to live. I am sure you have heard about needing a 20% down payment, well this is a threshold, it’s not mandatory. You can buy a house with as little as a 5% down payment. When you put less than 20% down, you will be paying CMHC or another insurer to insure your mortgage. The cost and rate change as you put a higher percentage down. Remember to reserve some money for any repairs/maintenance that may pop up.
There are several signs that you and your partner are ready to buy a home.
First, you should have a steady income. It might be best to wait until you’re both working full-time before leaping into homeownership.
Second, make sure your credit score is in good standing.
A high credit score can help save money with regards to interest rates and your mortgage loan. Consider getting some advice on how to improve your credit score before starting house-hunting together!
Next up—do not rush into buying a house! This may seem obvious but take your time and have all your ducks in a row. Buying a home is a big decision. It’s a big investment and it’s also a big commitment. The financial aspects of buying a home are important but they shouldn’t be the only thing you think about. When you buy, consider how it will affect both of you and your relationship moving forward.
What you will be able to afford depends on your credit score, the amount of debt you have, and your income.
Understand the factors that will determine what you can afford. The first step is meeting with one of our mortgage representatives. Then create a budget and understand how much money you need to pay for your new home. Remember, it’s the payment that you live with and that you have to make every month.
Keep in mind that today’s mortgage rates are bound to change, they always fluctuate.
The two things that are in constant motion are the real estate market prices and interest rates. Let’s say that you bought a home last March for $800k with an interest rate of 3.26%. The same property today sold for $650k and the interest rate is somewhere around 4.5%. The interesting part is that the monthly mortgage payment is almost the exact same.
Smart people buy low and sell high. It is better to buy right now while prices are down so that you can get into the market when the prices are lower. The appreciation and equity is bound to happen when prices rise. Newton’s third law of motion states that what goes up must come down. We know in real estate this is also true and that also what goes down must go back up. Everyone needs a roof over their head and owning a home will always be a great investment.
You can find homes for sale in about any price range, including starter homes.
If you’re buying your first home don’t make a common mistake and think that you will be buying your “forever home”. First time home buyers move on to their next property on average within 5 years of buying it as life tends to change. You may need more space or need to move to another area, so don’t stress about finding the “perfect” home now. Plan and look for a great place to call home and get into the market. There are plenty of affordable options out there right now.
