Do you dream of finally owning your own home? Becoming a homeowner is a big decision, but it comes with some great benefits. A home is an excellent investment, gives you more stability and security, and is a place you can truly put down roots and call your own. If you’re finding it hard to get to a place where you finally feel ready to buy, these tips will help you on your way. Here’s how to stop renting and buy your first home.
1. Get a handle on your financial situation
Do an in-depth assessment of your current income, savings, debt, spending habits. You want to have a good understanding of your entire financial picture. It’s important to note that even if you have debt, you may still qualify for a mortgage. For help, speak to a professional such as a Financial Advisor about your position and get recommendations on how to prepare for buying a home.
2. Request a copy of your credit report
Your credit score is the first thing banks will look at when considering you for a mortgage, and you need to have a high enough credit rating. A credit score of 700 or above is generally good, and 800 or above is excellent. If you want or need to improve your credit score, here are some great tips.
3. Assess the market where you want to live
Do some research so you know how much homes in your area cost, and compare this to what you’d be able to afford. You may need to adjust or make a few concessions to find an area with homes that fit your goals as well as your budget, or else look at smaller properties, such as apartments or townhomes.
4. Use a mortgage calculator
There’s a handy mortgage calculator you can use here. Keep in mind you’ll need to put down a down payment, which is usually between 5-20% of the total purchase price. The best thing to do is to get pre-approved for a mortgage before you start house hunting so you know the limit of your budget.
5. Learn more about government programs and grants
For example, the first time home buyer’s program in Canada allows you to withdraw up to $35,000 from your RRSPs (increased from $25,000 in March 2019) to use towards a down payment on your first home. There may be other specific programs and grants in your area to help you buy your first home. It’s worthwhile looking to see what’s out there in case it might work for you.
6. Consider a rent-to-own program
More commonly found in the US, rent-to-own homes are cropping up in areas of Canada with high housing prices, particularly BC and Ontario. A rent-to-own home is essentially what it sounds like – a homeowner or investor makes an agreement to rent their home out to a tenant and gives them the option to purchase the home after a period of time. This allows the tenant to contribute to their down payment over time and build their credit score. But, it may also come with higher rent as a premium for the option to buy.
At the end of the day, it’s best to speak to a professional when it comes to deciding to buy your first home. We’re here to help you however we can – call us today with any questions you have!
Pin for later