This article was originally published on RBC Discover & Learn and has been republished here with permission.
You always dreamed of the day when you would finally own your own home, and now that you’ve been pre-approved for a mortgage, you’re one step closer to seeing your dream come true. Before making an offer, consider:
Planning ahead doesn’t have to be hard, and it may save you in the long run — here’s how.
You might think your home-purchase budget should be the same amount as your pre-approval, but before you start looking for homes in that price range, consider adding up all the costs involved in a home purchase. After all, your mortgage isn’t the only expense you’ll have.
Keep in mind fixed costs, like closing fees which tend to amount to about two to five per cent of the cost of your home. Closing costs can include home inspections, appraisals, attorney fees, land-transfer taxes, land registration, and mortgage default or Canada Mortgage and Housing Corporation (CMHC) insurance.
Home insurance, property taxes, and condo fees should be considered depending on the type of home you’re looking to buy. Adding all these fixed cost to your budget, you might decide to borrow less than you qualified for in order to have more room in your budget.
In addition to these fixed costs, consider variable expenses — like moving costs if your friends won’t move your stuff in exchange for beer and pizza, the cost of new furniture, and any renovations you’re looking to do.
Some of these expenses can come later on — unless you don’t think you’ll be able to stand that peeling linoleum flooring in the bathroom for months or years. Will the roof need to be replaced soon? What are things that might translate into big costs down the road?
Taking on a mortgage is a big commitment. If you’re buying a home with a partner, you may need both of your incomes to pay the bills. But if something happens and one of you can’t work, you might be unable to pay your mortgage.
There are ways to help protect your family and home:
You’ve got your mortgage pre-approval, decided on your home-buying budget, started an emergency fund, and got a quote for the insurance policy — now what?
Now you need to find the home you want and make an offer.
After you’ve bought your home, you’re not done yet! Here’s some of the key things not to forget when moving.
Moving into your first place is exciting, but you also want to be confident you’re taking care of your (and your family’s) future. That’s why it’s important to know how much your budget will allow, what steps you need to take for the big move, and how to protect your home for whatever life has in store.
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
This article was originally published on RBC My Money Matters and has been republished here wit...
This article was originally published on RBC My Money Matters and has been republished here wit...
How much can you afford to spend on a home? Use these tips to set a budget for buying your first home with advice for preapproval, pre-qualification, and financial planning, and more, so you can buy your first property with confidence.
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