Finding and buying a house

Finding and buying a new house is rarely as easy as looking for a new home, finding something you like, handing over a cheque and snagging the key. There are a number of important steps to go through, each one equally significant. Giving each step a good amount of consideration is the best place to start when buying a house.

1. First, you’ll want to ensure home-ownership is what you’re looking for. This is one of the first big decisions you’ll make in the home-buying process, so it’s important to do the research and choose what makes sense for you and your family. Consider what you’re looking for in a living space and what finances you have available.

Research the certain and potential costs you’ll come across when owning your home such as:

Upfront costs: This includes the money you’ll spend at the offset for your down payment, closing costs and taxes.

Ongoing costs: This includes the money you’ll need monthly to cover your mortgage payments, property taxes, insurance, bills, fees and maintenance

Major repairs:  This includes potential costs such as fixing your roof or foundation

Owning your own home will give you the freedom to renovate and build equity, but it also comes with more financial risk than renting. Before you get too far down the path to home-ownership, ensure you’ve done the research to confirm it’s truly what you’re after.

2. You’ll want to ensure that you’re financially ready for the investment. Total your current monthly expenses and subtract the number you get from your total monthly income after taxes. This will let you know how much money you’ll have each month to spend on the costs associated with owning your own home. Keep in mind, you want to keep your monthly housing costs under 32 per cent and your monthly debt load under 40 per cent of your monthly income before taxes. Any higher, and you may have trouble securing a mortgage or affording your home.

Spend a good portion of time going over the math. Consider all costs involved in home-ownership, as well as the costs of moving. What will your new budget look like as a homeowner? Will you have enough money month over month to pay for your home and avoid depleting your savings or dipping into your emergency fund? If necessary, find ways to bring your monthly costs down as much as possible so when you do buy your new home, you won’t have to drastically alter the lifestyle you’ve become accustomed to.

3. Determine how you’ll be able to finance your home before you start looking for one; it’s a good idea to get pre-approved for a mortgage. This will be a good indicator of how much you can afford and what your interest rate and mortgage payments will look like. With this information in hand, you’ll be able to narrow down your search to specific areas or types of housing. Your pre-approval isn’t a guarantee of your final mortgage, and you’ll still have to go through that process when you’re ready. However, it will save you time you may have spent looking at something you may not be able to secure the funding for. It’s a good idea to choose a home that will require a smaller mortgage than you’re pre-approved for so you’re not testing your limits.

4. Finding the right home can be the most exciting step in the home-buying process. Research, take notes and compare. Look at everything from the location to the lifestyle it predicts. Decide whether you want to own the land or share common costs with others. Consider your surroundings: Will the green areas stay as such? What is the crime rate? Are there opportunities for construction nearby, or is what you see what you get? Feel free to talk to the neighbors to get an idea of what it will be like to live in the area. You can never have too much information.

5. Once you’ve found the perfect home it’s time to make an offer, get a mortgage, and close the deal. On closing day, your lawyer or notary will collect the mortgage money from your lender and the down payment and closing costs from you. He or she will pay the seller on your behalf, register the home in your name and provide you with the deed and the keys. Congratulations on your new home!

Of course, the work doesn’t end there. The heavy lifting is done, but you’ll need to maintain and protect your investment. Make your payments on time to avoid unnecessary fees. Keep up with your maintenance schedule to keep your home in great condition. It might be your first home or it might be your last, but one thing is for sure: you’ve earned it.

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