5 New Year Resolutions for First-Time Home Buyers
While it may be cliché, a new year is a great time to focus on resolutions, goals, and intentions. For some, it’s going to the gym. For others, it’s reading their way through a list of books. But perhaps you have chosen to pursue one of the greatest life transitions of all — becoming a homeowner. Here are 5 New Year Resolutions to help you achieve your 2020 goal of entering and successfully navigating the real estate market.
1. Pinch Your Pennies
If you committed to buying a home this year, you are going to have to rethink your spending habits. A down payment isn’t the only financial hurdle to overcome. From property taxes to renovations and putting some money aside for unexpected home-related expenses, there is a long list of expenses you need to be prepared to cover in the future. Luckily, there are plenty of small and easy ways to save money throughout the week—pack a lunch for work, make dinners at home, borrow instead of buying, cancel unnecessary subscriptions and those abandoned memberships, and save any extra income that comes your way instead of splurging on large purchases.
2. Check Your Credit
Your debt-to-income ratio is used by mortgage lenders to determine how much of a loan you qualify for. A low credit score can negatively impact how much money a lender is willing to loan you as well as your interest rate. Even a few percentage point differences in an interest rate can cost you thousands over the life of a loan. So, it’s important to look at your credit report before the bank does and work to improve it, if necessary. If you do have balances to pay off, keep these three rules in mind. First, don’t spend more than 30% of your available credit. Second, pay your credit card bill on time. And third, pay in full each month.
3. Set Financial Goals
In addition to watching your spending and improving your credit score, start saving for your down payment. This is arguably the biggest and most difficult part of the home buying process. With the average home price in Calgary currently sitting at about $485K and the average Airdrie home at about $440K, you’ll need to provide a minimum 20% down payment if you want to avoid taking out a high-ratio mortgage. Coming up with $85,000 – $100,000 isn’t easy, so it’s important to set financial goals with weekly, monthly or quarterly targets. Don’t forget to utilize as many resources as possible, such as the first-time Home Buyers’ Plan that allows you to withdraw up to $35,000 from your RRSP in a given calendar year.
4. Hone in on a Property
Searching for a home can be just as overwhelming as saving for a home. Before you start looking at properties, get specific about what type of property you want to purchase and what communities you would like to live in given your budget parameters. Is your dream home a condo? A townhouse? A single-family home? What are your current needs? What are your future needs? Consider all of the advantages and disadvantages of each type of property and spend time researching how your lifestyle would differ in each property. Last but definitely not least, keep the mortgage stress test in mind during your home search.
5. Find Your Home Buying Team
For a first-time home buyer, the purchasing process is unfamiliar territory—which is why you should find a home buying team to help you navigate the many twist and turns. Lenders, real estate lawyers, appraisers, builders and home inspectors can help you through every specific step of this big yet exciting transaction. When searching for real estate professionals, read as many reviews as possible and ask around for recommendations. And don’t forget that Genesis Builders Group is here to support you every step of the way by providing helpful advice that will turn your dream home into a reality.
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