Smart Ways to Get Your First Home

Buying a home these days is quite different from a decade ago, mainly because of the soaring housing prices that surpass average incomes. It's a tough time for first-time buyers - but don't lose hope! Owning a home isn't just a far-off dream. For years, people in expensive big city markets have used these hacks to establish a foothold in the real estate market. Read on to learn some of the best hacks to get you into your very first home and achieve your dream of homeownership.

Know Your Budget

First things first - let's talk about money. Understanding your financial limits is key when buying your first home. Avoid getting stuck being 'house-poor' by knowing what you can afford. Consider all your expenses like groceries, utilities, child care, insurance, and extra ‘fun’ expenses. This way, you can enjoy your new home without stressing over the costs.

Consider a Fixer-Upper

Think of your first home as a smart investment, not just an emotional buy. Look for a place that might need a little TLC but gives you a chance to build some 'sweat equity.' This move up the property ladder will help you build equity for your future dream home, the one that suits you best. Everyone has to start somewhere, and a fixer-upper might just be the starting point you’re looking for.

Rental Income Potential & Roommates

Getting a property with a rental suite can be a good move. If it's a self-contained unit, most lenders see the estimated rental income as part of your total income. This approach might help you afford a pricier home, while having someone else help with your mortgage. Local governments are getting onboard with helping to create accessory suites and tiny homes, so it’s worth exploring.

Again, we’re seeing more young people buying and taking on roommates to help cover costs. Roommates won’t help you qualify, unless they go on title (see partner below) but they are a tried and true way to make the initial years of ownership affordable. This is also how many kids and their parents get into the student rental space. In a perfect world, we want this to be our own space but if you are determined to get into the market this is a highly effective way to accomplish it.

Use a Co-Signer or Partner

If your credit or income isn't quite there for a solo buy, think about having a co-signer. They can usually be taken off by the time you renew your mortgage, making it easier to get your home. Or consider partnering with friends and family. We’re seeing more and more people combining resources to jointly get into the market. It’s a creative solution that can work for some. It does have some risk, and requires a lot of upfront discussion to ensure everyone understands the partnership, so independent legal advice is a good part of this early work.

Don’t Wait for Interest Rates to Drop

Home prices go hand in hand with interest rates. When rates go down, prices go up due to more demand. Mortgage interest payments are by far the biggest expense with homeownership. Choosing a shorter mortgage term now lets you benefit from lower rates in a couple of years. It's smarter to pay a bit more interest now than overspend on a home.

One of the ways we bring value to our first time buyer clients is to make sure they are well educated about their mortgage option and cost structure. The vast majority of first time home buyers still source their mortgage by walking into the branch of their local bank, and end up paying the posted rate or very close to the posted rate of interest, adding thousands of dollars to their mortgage cost per year. We’ve partnered with mortgage brokers that have the ability to source and provide buyers other options and actually get lenders to compete for their business.

While these tips won't solve all of Canada's housing affordability issues, they can help you navigate your first home purchase. If you're pumped about checking out properties and making that dream home a reality, book a no-obligation consultation here. We’d love to hear what you think and want to accomplish in the market.

Thanks for reading!

Paul Fitzpatrick

Appointment Calendar: https://calendly.com/homegrouprealty

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