Whether you are in your 20s, 30s or 40s, buying a home is a particularly important event in itself, as it involves investing a large sum of money, among other things. In fact, the various steps involved in home ownership usually generate a lot of stress, especially when it comes to the mortgage loan.
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Therefore, many people wonder if they are really suitable for buying a home.
Here are five signs that will tell you if you’re ready to buy a home… or not!
1) No savings for a deposit
In short, it is important to give a good amount of money for the purchase, if only to reduce the amount to be borrowed and to prove to the seller that the offer is legitimate. Also note that in order to be comfortable and cover the running costs of a home, you must put down more than the 5% down payment required for CMHC financing or traditional 20% financing.
So for a $600,000 property, a 20% down payment would be $120,000.
2) Not trying to find out if you qualify for a mortgage
There are many mortgage lenders out there, all with different offerings that can add thousands of dollars to your wallet over the years.
In short, if you haven’t taken the time to compare the different mortgage rates and financing terms, or even enlisted the help of a specialized mortgage broker, it means you may not be ready to invest in buying a home.
3) Not pre-approved for a mortgage
Such pre-approval shows the seller of the property that you are financially able to buy a home, but more importantly, it gives an idea of how much you can borrow. Depending on the institution you are dealing with, you can typically protect your rate between 30 and 120 days. In this case, interest rates will eventually be reduced while you wait for pre-approval. The lender gives you the lower interest rate.
4) Not thinking about the type of house you want
Obvious to some, unimportant to others, but if you haven’t thought about the style, age, size, or even neighborhood of your future home, it’s probably a sign that you’re not ready to become an owner just yet !
5) Credit score too low
In order to be able to buy a house, it is necessary that the credit rating is usually higher than 650. It is possible for a person to be successfully qualified for a mortgage by using alternative lenders, but at what cost?
Therefore, before buying a home, make sure you build a sound credit rating that inspires confidence.
If you don’t have a deposit, a relative can send you a donation that financial institutions will accept.
If your credit rating is poor, improve it, particularly by not exceeding your credit limit or by only using 35% to 50% of the credit due to you.