First-Time Home Buyers
3 Tips To Get You On Your Way
How much can I afford to pay for a house?
Before you start shopping, find out “how much house you can buy” by getting pre-qualfied. (www.DomusFinancial.com/on-line-application) You will need to gather the following information:
- Your and your partner’s annual base employment income;
- Your and your partner’s annual bonuses or overtime income for the previous 2 years;
- The down payment funds that you will apply to the purchase (i.e. cash in savings/chequing accounts, Canada Savings Bonds, guaranteed investment certificates, inheritances, gifts from parents, RRSPs, investments, etc.), including an allowance for “closing costs”, which is usually approximately 2% of the purchase price;
- Your and your partner’s payments for credit card accounts, leases, vehicle loans, personal loans, student loans, etc.;
- A comfortable level of “shelter cost” is to allow a maximum of 35% of your gross annual income for principal, interest, property taxes, home heating and condominium maintenance fees if applicable. All of your other monthly obligations, plus the “shelter cost”, shouldn’t exceed 42% of your gross annual income.
What type of house should I buy?
Make a list of your “needs and wants”. The “needs” are “must-haves”. The “wants” are optional.
- How many bedrooms do you need for you and your family?
- How many washrooms do you require?
- Do you have time to cut grass, plant flowers and remove snow from driveways?
- Do you need a large principal room for the family to use?
- Can you convert an unfinished basement into useful space?
- Where do you want the laundry room to be located?
- Do you need a lot of closet and storage space?
- Do you need a garage?
- Do you need a play room for your children?
- Do you want lots of space around you?
Where should I buy a house?
Location, location, location… Small town, city or in the country? Established area or new sub-division? Near a lake or a river or on a hilltop?
- Do you need to be close to public transit?
- Do you need to be close to schools and parks?
- Do you need to be close to your work place?
- Do you need to be within walking distance to shops and places of worship?
- Do you mind driving long distances?