Looking for engaging content for your social media platforms? Explore the REALTOR.ca Living Room blog for inspiring blogs like the one below.
Share it with your clients and make sure to follow REALTOR.ca on social media for more updates.
Have you been renting for a period of time wondering when would be a good time to buy? The answer isn’t as straightforward as you think–it’s a mix of both what’s happening in your personal life and what’s happening in the real estate market.
Whether you’re simply ready to settle down or you’re facing increasing rent, this article explores signs that may let you know it’s time to start the home buying process.
1. You’re ready to settle down
What “settling down” looks like changes from person to person, but generally, if you’re ready to commit to one home and one location for the foreseeable future, and you’ve grown tired of renting, you may be ready to buy. While the home buying market can be tough to enter at times, when you compare rent with mortgage payments, in some cases you could be saving money with homeownership—or at least building up your equity.
“Even with high interest rates, when you’re paying a mortgage, a portion of that is going into your own equity in comparison to rent which all goes to paying someone else’s equity,” explains Sunny Duggal, a REALTOR® and broker with RE/MAX Excellence Real Estate in Mississauga, Ontario.
2. You’re financially ready
Buying a home is one of the biggest purchases someone can make in their life. The transaction involves a lot of moving pieces including a good credit score and a sufficient down payment. Plus, after the sale, there are many costs from property taxes to mortgage payments, to new furniture and maintenance.
Depending on your purchase price, down payments can be as little as 5% or as high as 20% of the home price. With pre-construction, you can put down 5%, and then pay in installments at a later time which can be ideal for people hoping for some extra time to save.
A bank, lender and/or mortgage broker will also make sure you have a good credit score. So, if you’re paying your bills on time, have a good debt-to-income ratio, and your credit score is steadily increasing—these are all good signs it’s the right time to buy.
3. You’re comfortable with the long game
“The real estate market, like any other, can and will continue to cycle,” says Alex Strothard, a REALTOR® and sales representative with Sage Real Estate Brokerage, in Toronto, Ontario.
One sign you’re ready to buy is you’re thinking long term, which helps to eliminate some fear that comes along with market turbulence. Having a long-term strategy can ensure you’re not waiting on the sidelines for the next best time.
When interest rates go down, home prices typically go up, so getting in the market now may help you to see larger gains in the next few years. You may be ready to buy if you’re looking to build equity and believe in the market growth of the area you’re thinking of buying in, and are in a position to make an investment that could take some time to vest.
4. You have a stable career
“If you have a secure job and money saved, real estate is one of the best ways to secure your future,” says Duggal.
Having a stable career can be a good sign you’re ready to purchase. Mortgage lenders want to see you’ve been at your company for a good period of time and are typically more favourable towards permanent, full-time work.
You should also consider the overall employability in a given region. If you decide to leave your current job in two years’ time, will you have to move again in order to find something in your field?
Strothard says although the right length of employment will differ depending on the job and career path, no matter what, having a plan B is important. A plan B can help you plan for the unexpected like job layoffs and emergencies. Plan B might be additional savings or other living arrangements, says Strothard.
5. You’re itching for projects
Renting has a full suite of benefits, but your ability to renovate or do some more intensive DIY projects around the house are typically limited. If you find yourself wanting to personalize a home, it could mean you’re ready to buy a place to make it your own.
There are a few different avenues if this is the case. You could look into pre-construction homes, understanding there’s a different down payment structure and it might be more than a year before you’re in the new space. New construction means you can pick the fixtures, finishes, and sometimes certain layout aspects of a new home, but it’s not a full customization.
You could also look at purchasing an unfinished home, which allows you to personalize specific elements without having to do a complete custom-build. It does require specific permits and loans, so you’ll need to understand the specifics—a REALTOR® can help you with this.
There’s also the option of buying an older home that needs some renovations. The benefit here is you’ll be able to live in your home while the work is done (provided it passes inspections) and you can do your projects gradually.
6. You’ve met with a REALTOR®
Some think the right time to talk to a REALTOR® is when you’re ready to pull the trigger on a home, but actually you should start much sooner.
A REALTOR® can give you insight, knowledge, and resources that can inform your choices. They can help you wrap your head around all the big and small aspects of homeownership and provide you with market research that can help you get closer to finalizing your decision to buy.
“It’s all about when you feel ready and you’re within your means,” says Duggal.
Buying your first home can sometimes feel like a lifetime away, but you may be closer than you think. If you’re still unsure of whether the time is right, meet with a REALTOR® to explain your situation and get their professional opinion.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
