Jamie Vieira Oakville Real Estate Agent

Kristie Moeller Century 21 Sales Representative

Wondering if you should continue renting or take the plunge into home ownership? To help you clarify this debate, here is a list of questions from various professionals associated with a real estate transaction.

Why do you want to buy a house?

First-time buyers have to ask themselves if they want a home because their friends are buying and they think it’s the next step or because it actually fits into their long-term life plan and will be a smart financial move. We should have an overall financial plan that takes into account our short and long-term life goals, to ensure that such a significant investment makes sense.

What values will I honour by buying or renting?

If you are thinking of starting a family in the next five years, for example, will the home you are considering accommodate such a life change? If not, you should think about the financial implications of selling a few short years after buying.

Do you have a steady job and income?

It’s harder and harder to be approved for a mortgage if your provable earnings are not steady. A steady income and a reliable job make a very big difference these days. Going through a full analysis of credit and income is an important first step for house-hunters because it provides an accurate feel for the amount of house you can afford and will address any possible issues before you begin your search.

A credit check can be done free of charge with a broker, or you can receive your score and a detailed credit report for around $20 at either Equifax or Trans Union. The best lending rates are usually reserved for those with a score of 750 or higher. A higher score could translate into thousands saved over the life of a loan. When you get your report, scan it for any discrepancies – they happen more often than you think – and correct them right away. It’s best to know you’re in good standing prior to applying for any type of loan.

Do you have any money saved for a down payment? What about for the closing costs?

You can purchase a home with less than 20 per cent down, but if you do, you’ll be required to pay mortgage insurance. If you’re purchasing a home later in life, and with a partner, 20 per cent isn’t entirely unrealistic. However, it’s still very difficult.

You’ll also need to consider closing costs, which can add thousands to your total bill. If you’re not prepared for the closing costs, you could be left shocked and scrambling at the eleventh hour to find the necessary funds.

It’s also important to consider how much your monthly mortgage payment will increase if rates rise (if you choose a variable rate mortgage) or when your mortgage comes due at the end of the first term. It is quite easy to calculate the outstanding balance due at the end of a mortgage term and worth the exercise to see how much an increase in interest rate will affect the monthly payment. Then, it’s back to your five-year plan. Will you be in a position to manage an increased debt load, or do you plan to be living on one salary with two children at home?

How much are you spending now for rent vs. your expected mortgage payment?

Speaking with a mortgage specialist or plugging numbers into an online comparison calculator will help you get a rough idea of the financial implications of each scenario. It’s often a good idea to pretend you’re making the increased monthly payments for at least a few months. If you’re paying $1100 in rent, for example, and your mortgage broker tells you your housing costs would double, try socking away $2200 a month to see how it feels, how it affects your lifestyle and if it’s doable. You might be in a better position a few months from now if you socked away more money and worked toward the goal of homeownership in the future.

If you have any more questions regarding the buying process, or are ready to get started, call Kristie Moeller at 905 845 9180, or direct at 289 937 6969.

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