The Biggest Purchase You’ll Ever Make: Preparing to Buy a Home

14 Jun The Biggest Purchase You’ll Ever Make: Preparing to Buy a Home

Women tend to be risk-averse. In fact, when under stress, men tend to take more risks, while women consistently take the less risky option.[1]

So when it comes to buying a home, women often assume they can’t do it on their own, especially the overwhelming majority of women who don’t consider themselves to be “financially literate.”[2] They assume they don’t have enough money to support home ownership and the financial burden that goes with it.

On the other hand, for any woman trying to take care of her financial needs now and into the future – whether she is single or not – renting an apartment may not be the best option. Paying rent is temporary. A woman who buys a home builds equity, which may be part of your long-term financial strategy.

If you’ve ever wanted to own your own home, whether it’s a condo, a townhouse or a house, you’ll need to start now. Prepare for the biggest purchase of your life with these 7 steps:

1. Save, save, save. Depending on where you live, buying a home can be costly. In urban centres, even a small condo can be upwards of half a million dollars. Whether you’re saving in an RRSP, a TFSA or just an old-fashioned savings account, save as much money as you can toward your home purchase. You’ll need 5-20% as a down payment, but don’t forget to factor in other closing costs, such as land transfer tax, title insurance and legal fees.
2. Learn about mortgages. Talk to a mortgage lender early on to make sure they understand your situation and they work well with you. A mortgage isn’t just rent you pay to the bank. It’s a loan that covers the price of the property and the interest, and the part you have already paid for is your equity. Having a solid credit score is important when it comes to qualifying for a mortgage, so find out what yours is and take steps to make it stronger, if necessary.
3. Research incentives. There are a number of incentive programs that can help make buying a home more affordable, especially if you are a first time home buyer. In fact, even if you previously owned a home with your partner or spouse, after a certain period of time, you can become a “first time home buyer” again. Look into the RRSP Home Buyers’ Plan, the First-Time Home Buyers Tax Credit and the GST/HST New Housing Rebate for programs that make the financial burden a bit easier for first time home buyers.
4. Consider extra income. Some advisors suggest you not buy more than you need, especially if you’re trying to buy in a very expensive area. On the other hand, the home you buy could provide you with an extra source of income. That two-bedroom condo might lead to a roommate situation, or a duplex might allow you to rent out an entire apartment. If the rent you earn covers your mortgage, even better. But even if it only covers part, it may still be worth it on your path toward financial security.
5. Determine your budget. It’s expensive to own your own place. If you purchase a condo, you’ll have to take condo fees and amenities such as parking spaces into account. If you buy a home, don’t forget municipal and school taxes and even outside maintenance such as lawn care. You’ll have living expenses on top of your mortgage and you’ll want to build an emergency fund to cover any urgent situation that pops up. To determine how much you should be able to comfortably afford, it’s a good idea to use an online affordability calculator.
6. Think about lifestyle. Do you spend many nights and weekends out on the town with friends? Do you prefer to live on a quiet street? Consider your lifestyle carefully and select neighbourhoods that will support that lifestyle. Make sure you’re comfortable walking around by yourself in the area, both day and night.
7. Start the search. Your perfect home is unique. Some women may prefer visiting properties with an agent, while others prefer to begin by visiting open houses anonymously, just to get a sense of what is available. When you’re ready, find an agent who understands your needs and your budget, someone who is on your side when it comes time to negotiate a price.

Preparing to buy a home is daunting. When you’re trying to achieve your goals, it’s important to surround yourself with the right team. The team should include your mortgage lender, your real estate agent, and any family and friends who will help you along the way.

To learn more about achieving financial security, contact us.

[1] https://journals.sagepub.com/doi/abs/10.1177/0963721411429452

[2] https://www150.statcan.gc.ca/n1/pub/75-006-x/2016001/article/14464-eng.htm

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.