Everything you need to know step by step.
Decided if Homeownership is Right for you
Buying a home is a big decision. Ask yourself 4 questions before you decide if you’re ready to own a home. Everything you need to know step by step.
- Am I financially stable?
- Do I have the financial management skills and discipline to handle this large a purchase?
- Am I ready and able to take responsibility for all the costs that come with being a homeowner?
- Can I devote the time to regular home maintenance?
Also consider the many pros and cons of owning versus renting a home.
|Freedom to renovate||Ongoing costs including property taxes and insurance|
|Ability to build equity in a safe and secure investment||Increased monthly payments if interest rates go up|
|Potential for rental income||Possibility of unexpected and costly repairs|
|Less maintenance and repair costs||Monthly payments may increase year after year|
|Lower monthly upfront costs||The risk your lease won’t be renewed|
|Shorter-term commitment||Paying someone else’s mortgage|
Check if You are Financially Ready to Own a Home
Are you financially ready to own a home? Look into these 5 calculations and questions before you meet with your broker or lender.
- Compare how much you currently spend on expenses and debt payments with the amount you have saved or invested.
- How much can you afford to spend on housing each month without risking your financial health?
- How much do you need to save to pay for the upfront costs of buying a home?
Upfront costs include:
- the down payment
- home inspection and appraisal fees
- insurance costs
- land registration fees
- prepaid property taxes or utility bills (the buyer reimburses the seller or builder)
- legal or notary fees
- potential repairs or renovations
- moving costs
- GST/HST/QST on a newly built house or mortgage loan insurance
- How much would you be spending each month with homeownership expenses added to your current financial situation?
- What is your credit score? You can demonstrate your ability to consistently pay bills and debts with a copy of your credit report.
- Make an Offer and Close the Deal
When you’ve found the home you want to buy, it’s time to make an offer to the seller.
Your offer must include:
- your legal name, the name of the seller and the address of the property
- the amount you’re offering to pay (the purchase price) and the amount of your deposit
- any extra items you want included in the purchase (for example, window coverings)
- the date you want to take possession (“closing day”)
- a request for a current land survey
- the date the offer expires
- any other conditions that must be met before the contract is finalized (for example, a satisfactory home inspection)
You should expect to negotiate. While the process can be stressful, it’s all about making the best deal for you and the seller.
- Maintain Your Home and Protect Your Investment
Your home is likely your biggest investment. You should plan for the responsibilities of homeownership even before you move.
Consider the following tips for new homeowners:
- Make your mortgage payments on time.
Late or missed payments can lead to extra charges and affect your credit rating.
- Anticipate the costs of operating a home.
Extra expenses may include repair and maintenance costs, snow removal and alarm monitoring.
- Live within your budget.
Check every few months to see if you’re spending more than you earn. If you are, find new ways to save more or spend less.
- Save for emergencies.
Set aside 5% of your income as an emergency fund to be ready for unexpected expenses.
- Protect your home and family.
Prepare an emergency evacuation plan and check fire extinguishers, smoke alarms and carbon monoxide detectors regularly. Also, don’t forget to test your home for harmful radon gases that can pose a serious threat to the health of home occupants.