Thinking of buying a home? Want to step into the real estate market? With the real estate sector sitting in a buyer’s market for Calgary, it is understandable that more people may be inclined to want to get into the game. Before you do, here are some questions you should consider when taking the leap:
Have much debt do I have? To qualify for a mortgage, your housing costs and pre-tax income ratio must be under 32%. Housing costs include such things as your mortgage principal, your property taxes, your interest, and heat. Lenders also look at your entire debt ratio, which includes all your debts and payments you need to make, divided by your pre-tax income. This ratio needs to be less than 40%, and taken together, these two ratios will determine what type of mortgage you’d be able to receive.
If you’re still in prep mode, look at all your debts and find ways to consolidate them, reduce your spending to try and reduce these ratios and debt load.
Your employment situation. Look at your work situation and be smart with how much of a mortgage you venture to apply for. Talking to your supervisor and colleagues may be a good idea to try and understand the work trends and forecasts for your industry, for your work security. It’s cliché, but it’s true: never bite off more than you can chew, especially if you were to have a change in your work status and situation.
Understand home ownership costs. There are many costs associated with owning a home, besides the mortgage and property taxes. There are legal fees and title transfer fees, property insurance and especially with the new mortgage rules, a significant down payment. There is more furniture to buy, more utilities, and perhaps some renovation costs. Do a thorough and honest breakdown of what you will need to spend.
Length of time in home. Do you think you will have a significant life event on the horizon? A marriage? A child? A change in location for a career? Becoming empty nesters? These big Life moments will alter the choices you will make in buying a home. Be thorough with your plans and decide where you want to be in several years before you decide on an abode because you’d like for your investment to have time to grow, and not switching it too soon.
As always, if you have any questions about your upcoming home purchase, we’re here to listen and help!
Mark
Have much debt do I have? To qualify for a mortgage, your housing costs and pre-tax income ratio must be under 32%. Housing costs include such things as your mortgage principal, your property taxes, your interest, and heat. Lenders also look at your entire debt ratio, which includes all your debts and payments you need to make, divided by your pre-tax income. This ratio needs to be less than 40%, and taken together, these two ratios will determine what type of mortgage you’d be able to receive.
If you’re still in prep mode, look at all your debts and find ways to consolidate them, reduce your spending to try and reduce these ratios and debt load.
Your employment situation. Look at your work situation and be smart with how much of a mortgage you venture to apply for. Talking to your supervisor and colleagues may be a good idea to try and understand the work trends and forecasts for your industry, for your work security. It’s cliché, but it’s true: never bite off more than you can chew, especially if you were to have a change in your work status and situation.
Understand home ownership costs. There are many costs associated with owning a home, besides the mortgage and property taxes. There are legal fees and title transfer fees, property insurance and especially with the new mortgage rules, a significant down payment. There is more furniture to buy, more utilities, and perhaps some renovation costs. Do a thorough and honest breakdown of what you will need to spend.
Length of time in home. Do you think you will have a significant life event on the horizon? A marriage? A child? A change in location for a career? Becoming empty nesters? These big Life moments will alter the choices you will make in buying a home. Be thorough with your plans and decide where you want to be in several years before you decide on an abode because you’d like for your investment to have time to grow, and not switching it too soon.
As always, if you have any questions about your upcoming home purchase, we’re here to listen and help!
Mark