So, You Want to Buy a Home?
Okay, I’ve done it. A Woman of Independent Means has been updated, edited, uploaded…
and now it’s ready to be purchased. You asked for it, so BUY IT!
Home ownership is The Big Dream for many people. According to the Stats Man, income is the determining factor in terms of whether or not a body will own a home. No surprise, really. After all, home ownership is a big financial commitment and without enough income there’s no way to swing the dream into reality. How much income is dependent on where a person wants to buy a home.
According to the Stats Man, families with a household income between $50,000 and $80,000 are getting into homes of their own, mostly in rural areas or small towns where 71% of people between the ages of 25 and 39 owned their own digs. Again, no big surprise, since the cost of buying a home in a major city has gone through the stratosphere. In Toronto, about 53% of people in this same age group owned; in Montreal the number was 48%, and in Vancouver 54%.
Ultimately, the amount you earn will dictate how much home you can afford to buy. The other factor that will influence how much home you can afford is the amount of the downpayment you’ve managed to accumulate. For people who want to use the RRSP Home Buyer’s Plan, read this so you know what’s what.
Zero down has become all the rage, but it isn’t a smart financial decision since the more money you put down the house the less money you will have to finance. And since less than 20% down means mortgage insurance, your no-downpayment strategy can be really expensive.
The interest rate you get on your mortgage can make a huge difference in terms of how much your home ends up costing you. The lower your interest rate, the lower your payment and, ultimately, the lower the overall cost of your home. How interest rates affect your costs isn’t just affected by market conditions and the current economic climate; it’s also affected by the type of mortgage you choose, your payment frequency, and by your credit score.
The next thing you’ll have to decide is what you will buy and where it will be. Will you live in the city, in suburbia, in the bush? Will it be a condo, a townhouse, a semi-detached or a mansion? There are almost as many options as there are people to buy them, and what floats one guy’s boat will sink another’s.
It makes sense, before you enter into what will likely be the most expensive purchase of your life, that you get some help. There are lots of people waiting to take your money in exchange for your sage advice. Who will you choose to help you?
Have you got your closing and incidental costs covered? Some experts say to estimate 1.5% of the value of your home for closing costs. Others say more. You need to know what to expect so you can make a budget that’s realistic.
The prospect of home ownership is very exciting. But it can also make your tummy flip and your head swoon. Being prepared is the best way to sleep at night while you wait for moving day.