8 Key Questions You Need To Ask Yourself Before Buying Your First Home
Home ownership is a key part of many individuals' long-term financial plans, and can provide much-needed space for growing families.
With all that being said, home ownership is not for everyone. It's a significant, long-term commitment that requires strong financial standing and the right timing.
As a first-time Buyer, what questions should you ask yourself before taking on the responsibility of a mortgage?
It is absolutely critical, before you start viewing homes, to ask yourself; why do you want a home? What do you plan to do with it? Where are you in your life cycle? Answering those questions will determine the size of home you need and what makes the most sense for you given your short and long term family plans.
How much can you afford?
Before you even think about what style or size of home you want or need, you must to figure out what you can actually afford. That means taking an inventory of your income, expenses, assets, savings, and debts. Once you know these key figures, it's important to speak with a financial advisor or Mortgage Broker to discuss your affordability. The last thing anyone wants to do is fall in love with a house only to realize it's out of their budget.
Are there any other expenses I need to consider?
The mortgage and down payment aren't the only numbers you need to consider. If you're paying $2,000 a month currently in rent, and an online mortgage calculator tells you that your monthly mortgage payments for a house you've got your eye on would be $1,600 a month, you shouldn't run out and buy that house without taking the ongoing costs of home ownership into consideration.
Costs like property taxes, property insurance, land transfer tax, realtor fees (note this fee is typically paid by the Seller in a transaction, not the Buyer), closing costs, legal fees, utilities, and maintenance...these can really add up. So that $1,600 is not really $1,600, it may end up being quite a bit more when you factor everything in.
What kind of financing do you qualify for?
Just like applying for a credit card, whether you qualify for a particular home loan depends on your financial history. Lenders will look at your pay stubs, employment forms, and tax returns going back two years, as well as your credit score to determine eligibility. First-time homebuyers can apply for Land Transfer Tax rebates in some situations.
One of the first things you should do is check your credit report health. Visit Equifax or Transunion where you can purchase a copy of your credit report online. Review it and check for any errors. If you find any, report them right away as it can take some time to get them corrected. If your credit score could use some help, contact a financial advisor for advice on things you can do to improve it.
SMART TIP: Make it an annual habit to check your credit score regardless of whether there is a large purchase in your immediate future or not. You'll be able to spot and correct errors before they can damage your credit score and also monitor for possible suspicious activity.
Figure out how much money you have to put down. Every mortgage is set up differently, but the more you can afford to put down the better, because it will reduce your payments as you get going.
What do you see yourself doing in five years?
While you might be financially ready to buy a home, it might not make sense given your current job or relationship status. Is there any chance you'll be transferred to another town for your work? Are you or your partner, if you're looking with someone else, considering starting a family?
What kind of neighborhood do you want?
If you're young, being in a trendy neighbourhood might be the most important factor in your first home search, but if you're thinking about starting a family in a few years, you need to also consider the quality of your local schools, access to public parks, and the safety of your neighborhood.
What does your overall financial picture look like?
The last thing first-time homebuyers need to consider is whether they'll be able to stay on top of all the other financial commitments in their life. You don't want to sacrifice other important saving goals, like retirement or your child's college savings just because you really want to get this home right now. You also shouldn't put yourself in a situation where you're struggling to pay off your car loan or credit cards. Make sure you can manage all of your finances when you step into a major decision like this.
Are you working with the right REALTOR®?
Your relationship with your REALTOR® is just like any other financial relationship; it's important that you mesh well, are comfortable with them and trust that they'll go to bat for you when you find the house you want. All members of The Dianna Mandzuk Team are licensed, full-time REALTOR®'s with at least 8 years experience. Dianna Mandzuk herself has more than 31 years experience and an impeccable reputation with both her past clients and her peers. Please visit our Testimonials to see what others have to say about their experience working with The Dianna Mandzuk Team.
One mistake many people make is using a REALTOR® because they're a friend or a relative, not because they're familiar with the right area. You need someone who's knowledgeable about the houses and neighbourhoods you are interested in.
Dianna Mandzuk and her Team have been helping home buyers and home sellers with their real estate needs for 30+ years in Scarborough, Pickering, Ajax, Whitby, Oshawa, Durham Region, Courtice, Bowmanville, Newcastle, Newtonville, Port Hope - Rural, Cobourg - Rural, Orono, Kendal, Garden Hill, Elizabethville, Campbellcroft, Millbrook, Fraserville, Cavan, Bethany, Pontypool, Janetville, Nestleton, View Lake, Omemee, Cith of Kawartha Lakes, Caesarea, Blackstock, Burketon, Leskard, Enniskillen, Haydon, Tyrone, Solina, Hampton, Clarington, Port Perry, Scugog, Brooklin, Raglan, Little Britain, Seagrave, Rural Manvers, Victoria, Southern part of the City of Kawartha Lakes, Port Granby, Wesleyville, Port Britain, Baltimore, Dale, Zion, Clarke, Osaca, Canton, Decker Hollow, Crooked Creek, Kirby, Dranoel, Tapley, Fleetwood, Lifford, Yelverton, Lotus, Cadmus, Mount Pleasant, Ida, Emily, Manvers, Maple Grove, Mitchell Corners, Enfield, Prospect, Shirley, Utica, Glen Major, Uxbridge - Rural, Columbus, Sonya, Fingerboard, Valentia, Goodwood, Port Darlington, Wilmot Creek / Wilmont Creek.
Thinking of Buying or Selling? Contact us. Complimentary Current Market Evaluations PLUS staging is always FREE when you list your home with The Dianna Mandzuk Team!