Do you feel like paying rent every month is a waste of money when you could be working towards owning a home? Are you ready to buy your first home? We have put together information on the 3 most crucial factors you need to consider when making that decision.
Buying a home is an exciting adventure, but if you are a potential first-time homebuyer, there are many factors you must consider first to determine if this is the right step for you and your family. This includes your:
- personal situation
- financial situation
- personal goals
- location
Protect Your Home and Family with Mortgage Life Insurance
At AIME, we understand first time home buyers have lots of questions and want to make sure their investment is well protected. We are here with answers. We’ve created 20/20 Mortgage Life Insurance, to protect your loan and your family, in case of your sudden demise, illness, or disability.
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3 Crucial Factors to Consider When You Are Buying Your First Home
In Canada, it is generally safe to buy a house provided you stay within your budget and plan to remain in a house for at least 5 years. There are many factors to consider when deciding if you can afford it, but we have outlined the most important:
1. Cost of Housing
Understand the cost of renting vs. the market price of homes in your area as well as the expected trends of each. If you live in an area where house prices are extremely high due to a market explosion, this might not be the time to buy.
On the other hand, if you are renting and the rates are expected to grow exponentially due to growth or shortage of housing, a purchase might be the right choice.
4 BENEFITS OF PURCHASING MORTGAGE LIFE INSURANCE
2. Your Savings
Buying a house is an expensive venture. You have probably considered the down payment, but what about the closing costs including lawyers, appraisal, inspector, and property tax adjustments. If you don’t have the required savings yet, set up a savings plan while continuing to rent. Consider taking on extra hours or a second job for a set period of time to speed up the savings if owning a home is your primary goal.
Before you purchase, you will need to accurately budget for monthly costs that come with owning a home, such as:
- principal and interest payments
- taxes
- house insurance
- mortgage life insurance
- utilities.
Have an Emergency Fund
Owning a house means the potential for emergencies. When you own it, those costs fall on you. Do you have an emergency fund set up that will cover you in the case of a broken hot water heater, leaking roof or electrical circuit that requires work?
Be honest about the lifestyle you want. If you enjoy spending money every year on trips, dining out daily, or have an expensive hobby that brings you great joy – buying a house might not be the best choice for you right now. On the other hand, if you are ready to prioritize your needs over your wants, it might well be time for you to buy your first home.
3. Your Career
Having a stable job that you enjoy will make it easier to commit to the cost of owning a home. If you’re planning a career change, want to go back to school, or have a desire to travel, it may be better to wait until after you’re ready to settle down.
If you are self-employed, be aware that the lenders will want you to have built a proof of business. This typically means showing two years of tax returns to Revenue Canada to show that your business is making money. If you’re not quite at two years, use the time to add to your down payment or emergency fund!
If you have student loans, large credit card or car loans, it makes sense to prioritize getting out of debt first. For one thing, you will be in a position to look much more appealing to the lenders with minimal personal debt.
Call Today
The best advice is to crunch the numbers and do what is right for you. Have you recently purchased your first home or are ready to purchase now? Find out more about how our flexible and customizable mortgage life insurance policies can protect this important investment by contacting one of our agents at 1-844-974-2020 or fill in our online contact form.
