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When renting loses its spark and you tire of paying money on a property that doesn’t earn you any equity, you know the time has come to start the process of buying your first home. However, there’s a lot more to purchasing property than simply…well, purchasing!
Buying a house comes with the many responsibilities that can be a burden to both your finances and your time. That is why it is so important to take critical stock of your expectations, as well as your finances, in order to best prepare yourself for first-time home ownership.
Are You Ready to Be a First Time Home Buyer?
Becoming a first time home owner is so much more than just earning equity and being able to decorate however you’d like. You’ll be responsible not just for allocating part of your income toward mortgage and insurance payments, but also your time for repairs and maintenance.
Before you start your home search, you’ll want to take a look at your debt-to-income ratio, something that lenders scrutinize very closely when deciding whether or not to give you a mortgage. Overall, your total debt should be no more than 40% of your income and your housing debt should be about 32% or lower.
If you’re not sure how to accurately calculate this ratio or you would like a clear idea of what you can afford, I strongly recommend that you meet with a mortgage lender to get pre-approved. Not only will this give you an idea of what you can afford, it will help to keep your expectations realistic when you start to look at homes for sale in Saskatoon.
Determine Your Housing Wants & Needs
Are you someone that enjoys mowing the lawn and cleaning the gutters or would you rather just pay a monthly fee to have that taken care of for you? Do you prefer a short commute to your office and amenities or would you prefer a bit of a drive for the peace and quiet of country life? Knowing your housing wants and needs helps to keep you focused and narrow your search when looking at properties for sale.
It’s also important to keep in mind your future wants and needs too. While you may not need easy access to a good school now, if you plan to start a family in the coming years, this may be something you will want to include in your search. When buying a house, you need to remember that you’re not just moving in today and out next year when your plans change!
Financial Assistance for First Time Home Buyers
As a first time home buyer, you may qualify for a few different options from the government to help better prepare you financially.
The First Time Home Buyer’s Incentive is a shared equity plan with the Government of Canada that helps eligible first time buyers with a down payment to finance between 5-10% of the home they wish to purchase. The best part? It doesn’t have to be paid for 25 years or until you decide you’re ready to sell!
The Home Buyer’s Plan gives you the opportunity to take out up to $35,000 from your registered retirement savings plans (RRSPs) to help you buy a home.
The Home Buyer’s Amount is a non-refundable income tax credit of $5000 to provide up to $750 in federal tax relief if you purchased a qualifying home within the calendar year.
The GST/HST New Housing Rebate helps you to get back part of the taxes you may have had to pay if you bought a new home.
Working with a Buyer’s Agent
Many first time home buyers are wary of working with a REALTOR® because they are worried about the costs that may be incurred. What they may not know, is that working with a buyer’s agent is absolutely free and it comes with an extensive list of benefits!
A buyer’s agent not only will help you determine your housing wants and needs, but they will also answer all your questions and keep you informed of any homes on the market that meet your needs. They are focused on finding you the home of your dreams, so you don’t have to worry about searching high and low on your own! Then, when you find properties that match your search criteria, they’ll keep you on track during the viewing process and help you determine the pros and cons based on proven market experience.
A buyer’s REALTOR® will also work hard to negotiate the best deal possible, while protecting your investment to the best of their ability. Not only will they prepare all the necessary paperwork for offers and conditions, they will be with you through the inspection and walkthrough processes. They are there to offer experience and expertise so you can feel confident in the decisions you are making.
Buying your first home can be an emotional, exhilarating and a stressful experience. By following the right steps and using the services of a knowledgeable local REALTOR®, you can be sure the process will be as smooth and as stress-free as possible.
