If you’re a property owner then you already know the sheer amount of work that it takes to own your first property. Whether this is commercial, residential, or even just a plot of land. From start to finish the entire process of working towards owning a piece of property can be fairly rigorous, especially if this is your first time.
Most property owners tend to own residential spaces, usually just their own house and nothing else. This is the most common, plus this is what the average person is able to afford at most. But at the end of the day, all of that hard work, all of the stress, the money, and paperwork is all worth it just to say that you own your own home, your very own piece of property.
Nowadays, all over the world, it seems to become far more difficult to become a homeowner or even just a property owner in general. Cost of living is rising at fast rates, many jobs are not paying living wages, plus there is the issued debt (and that rising per person). While the vision of owning your very own home may seem like a distant vision, there are fortunately some ways to make it possible. Sadly, nothing in life is guaranteed but, these tips just may help you out with properly situating your finances so you can get the home or piece of property that you deserve to have.
Work towards removing all debt
If you have debt, you’ll want to make sure that this is completely paid off before you even think of buying a house. This is hands down one of the most important tips. Even if you’re not buying a house, but purchasing a property for your business, you’ll still need to pay off all of your debt first. So why exactly does debt need to be paid off first? More people now than ever are having to face debt, whether it be medical, student loans, credit cards, or others. Sure, while debt is incredibly common, debt is going to be what can truly screw you over.
Of course, terms and conditions may vary, whether you live in Canada, the US, or anywhere else in the world. Debt is something that you don’t want to get stuck with. The more debt you incur, the worst your financial situation is going to be. While your worth isn’t based on whether or not you have debt. It’s also important to know that debt can make your life a lot harder. Debt can actually be what gets in the way of you getting a mortgage.
Owning your own home is also just something that is immensely expensive as well. Sure, renting is far more expensive as well. And there is even that whole debate of paying $2,500 in rent a month because the bank questions whether or not you can even pay $1,100 a bunch for a mortgage. It’s not fair, and it can be quite infuriating too. However, it’s best to think about the fact that unlike rentals, when it comes to owning a home or any other piece of property, it’s entirely your responsibility. So if something leaks, you need to take care of it immediately.
Mishaps such as repairs or other types of maintenance are abundant for homes. These can build up and be incredibly costly. If you’re in debt, not only are you having to pay for a mortgage, bills, and other costs of living, but also fix up your property. It’s always best to be debt-free when buying a property because costs will add up fast. Any financial setbacks will set you back very far and things can end up going completely wrong.
Build an emergency fund
After you get yourself out of debt and pay everything back, you’ll then want to start getting yourself an emergency fund. This is going to help you fight off any possibilities of a financial setback. In case anything goes wrong such as a medical emergency, maintenance (such as a house or car), or any other potential financial setback will be saved thanks to having an emergency fund.
You’ll want to begin by creating a budget and then just sticking to this budget. You’ll want to put in enough money per month in this. You’ll essentially want this to be three months’ worth of your salary or even more. If bad news is ever in the way, you’ll be prepared thanks to having an emergency fund.
Focus on your other expenses
Once you have your emergency fund built and you’re finally out of debt, you’ll then want to change your lifestyle so you can save enough money for a home or other piece of property. All throughout Canada, but even the rest of the world, overbidding becomes normalized. This means that you may have to bid over the “sticker price” of a house or other property. It’s not fun to do, but this is now becoming one of the challenges of wanting to own a home.
There are plenty of expenses that you’ll want to think about such as housing-related expenses when shopping around. Plus you’ll need to think about what you can save up for. You’ll need to have money for a down payment, closing cost, moving expenses, and even deposits or other payments to have utilities to turn on. On top of that, you’ll also have to pay for regular expenses to pay for your lifestyle such as food, bills, luxuries, etc. So you can expect to do a lot of budgeting, but fortunately, there are budgeting tools to help out.
Know your options
Did you know that there are multiple types of mortgage loans? Did you know that you can compare mortgage rates? It’s true! Your down payment (and even monthly rates) can all heavily vary. They will all depend on what type of loan that you choose. This can also affect the type of house or property that you buy as well. Each type of loan will have its own qualifications that you’ll need to meet. So it’s super important to do thorough research and to check which loan has standards that you’re able to meet. Make sure to do all of this before applying to anything.
Look into assistance programs
Depending on your city and even region, there may be an assistance program waiting to help you. There are programs that are offered throughout Canada and even the rest of the world that will help out first-time homebuyers. These can sometimes consist of helping out with the down payment, offering low-interest mortgage, helping out with closing costs, and even some tax credits may just be offered too.
There are a variety of programs out there, it’s just up to you to take the time out and do some research. Don’t be afraid of reaching out to banks, mortgage lenders, or even your local government to ask about these types of programs. Some of these programs aren’t well advertised but there are plenty out there that you can try and utilize.
Understand the difference between what you qualify for versus what you can afford
Just because you qualify to buy your dream home doesn’t necessarily mean that you can actually afford it. The general rule of thumb Is that you keep your total housing cost below your gross income. So this should be under 30% if you’re able to do that. You don’t want to forget about your cost of living and even the regular luxuries that you have in life. So when you’re calculating what you qualify for versus what you can afford. Make sure to include
- Emergency situations
- Luxuries (such as a gym membership)
- Taxes
- Food
- Bills
- Transportation
But all think about anything else that you may have to pay on a monthly basis as well. So don’t forget to put all of these into consideration. So don’t try to set yourself up for failure by thinking about getting the house you desperately want or one that you qualify for. Because in the end, you just may not be able to afford it. You’ll end up struggling to make ends meet if you don’t follow this advice.
Strengthen your credit
Just like the US has a credit system, Canada does as well. Your credit score will be one of the factors that determines what you’re qualified to get. So be ready for this to affect your interest rates. You should look into building your credit score before you even begin to talk to a mortgage broker. It’s best to work towards getting a high credit score, preferably as high as you can possibly get it. Getting a copy of your credit score and credit history is fairly simple and it is usually free as well. Some tips for strengthening your credit score will include
- Paying off your bills on time
- Keeping your credit card balance as low as you can
- Use your credit card if you have one, as the lack of use will lower it
- Get out of debt
Trying to strengthen your credit score can be a bit of a tough task. Some things that can strengthen it can also make it go down. The credit scoring system is tricky, but once you learn the tricks to it, it becomes far easier to succeed.
