Buying your first home can feel like an uphill battle—but it doesn’t have to be. With smart planning and the support of your financial health coach, home ownership can be an exciting journey instead of an insurmountable climb. If you’re getting ready to start house hunting, here are three financial tips to help guide you. We also recommend that you get pre-qualified for a mortgage so there are no surprises along the way. Thanks for reading, and please reach out to Interior Savings for personalized financial advice.
Determine a reasonable down payment
To avoid mortgage insurance and keep your monthly payments affordable, many people aim for a 20% down payment. So, if you’re looking at houses that cost $500,000, you should be aiming to save a minimum of $100,000 for your down payment. If that number is too daunting, price out the cost of mortgage insurance as well as your monthly mortgage payment and see if that’s feasible—or, adjust your budget accordingly. You may end up looking at condos instead of houses, or a townhouse instead of a detached house. Or, you may change the location of your house hunt so you can get the type of property you want at a price you’re comfortable with.
Build and protect your credit
If you’re getting ready to buy your first home, there’s going to be a lot of paperwork—and your credit score will be key to getting that mortgage approval. Before connecting with a realtor, check your credit score and work towards improving it as needed. This may involve paying down debt, ensuring that your bills are being paid in full and on time and otherwise proving your financial responsibility. As little as six months of behavioural changes can have a significant impact on your credit score, so do the work and enjoy the benefits. Your Interior Savings advisor can help you build and protect your credit—please contact our team for more information.
Set aside additional savings
Most aspiring homeowners know that they have to save up for a down payment and closing costs, but not everyone understands what ‘closing costs’ means. This often includes realtor fees, land transfer taxes, lawyer fees and more. Talk to your financial advisor and your real estate agent to gain a clear understanding of what you’ll need to pay for and how much it will cost, as this can differ by region. Generally speaking, it may be 2-4% of the total cost of your home. You’ll also want to save money for moving costs (renting a truck, lost wages, etc), repairs to your new home, and any furniture, appliances or other purchases you’ll need to make right away. If it sounds like a lot to navigate, remember—it’s all achievable with the right support and a solid plan to make it happen. Thanks for reading and good luck, future homeowner!