Buying a home is a big deal. It’s one of the biggest milestones in a person’s life, and as such, should be undertaken only after extreme consideration and careful thought. Here are some questions to ask yourself before taking the plunge into being a homeowner.
Can you Afford It?
You might be thinking, ‘I make my rent payment every month with money to spare so it won’t be a problem’ but being a homeowner is more than just swapping your rent out for mortgage payments. You also need to be able to afford your down payment* (and you can’t borrow money for that, though money gifted to you is acceptable so long as you are not expected to pay it back) as well as homeowners insurance and mortgage loan insurance if your down payment is less than 20%.
On top of that, you have to be able to pay all of your bills (heating and air conditioning/electricity/water/cable/internet) that might have been included in your rent before. You also need to pay for any renovations, alterations, or emergencies without assistance (your insurance covers some catastrophes but you’d be surprised how many expenses you’re still on the hook for).
If you haven’t already, now is a great time to start up a savings account intended solely for home maintenance and emergencies.
Are you Prepared to Take on the Responsibilities that Come with Owning your Own Home?
As was briefly touched on above, you can no longer rely on calling your superintendent or landlord whenever something goes wrong. Roofing rotting and falling off? You have to get it fixed. Mould, mildew, or pest problem? It’s on you to deal with it.
You never know what kind of issues might come up (you could be lucky and have a home with very few problems to deal with) but you need to at least be prepared should there be a situation you’re forced to tackle.
Can You See Yourself Living There for at Least Five Years?
If you’ve already got your sights set on another destination or location you’d like to live in in the near future, chances are buying a home isn’t the right step for you (at least not yet). If you’re not sure where you’ll be in the next few years (or if you can seriously see yourself exploring and wanting to move elsewhere) then your best bet is to keep renting. Most leases operate on a year by year basis, meaning it’s a much shorter term commitment (and you don’t have to worry about selling the property when you’re ready to leave).
However, if you know you’re ready to settle down (or will definitely be staying in your current city or location for at least the next five years), buying a house and officially becoming a homeowner is definitely a great option.
Are you Financially Stable?
It’s impossible to predict the future, but looking at your current employment/money situation, ask yourself if you can be reasonably confident that you will continue to be able to cover your mortgage payments in a year/a few years from now.
You don’t need to love your job or want to stay there forever, but you should at least have a good idea of what the next couple of years are going to bring. If your finances are uncertain, you might want to consider sticking to renting (where at least you only need to commit for up to a year at a time).
Still unsure where you fall? Take this RBC Home Buying Readiness Quiz