If you’re thinking about buying a home, your head is probably filled with a million questions: Is now the time? Can you afford it? Will it pay off? Buying a home comes with an array of benefits. A fixed rate mortgage will stabilize your housing costs, your home will likely appreciate over time, you can deduct the interest on your mortgage, and you’ll earn equity. But these rewards come with responsibility. Are you ready? Consider the following before you buy.
Review your finances. To buy a home, you’ll need a down payment and a home loan – but that’s just the beginning. You’ll need money for moving costs, cash for regular maintenance like furnace cleanings, and a rainy day fund, in case the roof starts leaking. After you consider what you have in savings, look at your current budget to see if you can reasonably afford the monthly costs of owning a home.
Examine your lifestyle. If you’ve always lived in apartments, buying a house comes with new responsibilities. When something breaks, your super won’t magically take care of the problem. Are you prepared to spend your weekends doing yard work? You’ll also have less freedom to move – on impulse or by necessity. Think about the stability of your company, the security of your job, and any potential career moves before you commit to buying a home.
Make sure you’re qualified. Even small errors on your credit report can result in a higher interest rate or denial of a loan, so order copies of your report and correct any discrepancies now. If your score is low, start taking steps to improve it. If you’re comfortable with your score and serious about buying, get pre-approved for a mortgage. It will give you an idea of what you can afford, and the process will be easier with your financing in place.
Figure out what you want. Before you buy, think about what you need – not only today, but in the future. Do you plan to have children? Will you need space for an elderly parent? Is your preferred neighborhood growing – or in decline? Imagine that you’ll own your house for the next 10-20 years, and plan accordingly.
Of course there are plenty of other considerations that will affect your decision to buy a home, from the current interest rate to the housing market in your area. By taking steps to make sure you’re ready, you’ll be able to move forward when the time is right.
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