9 Signs You’re Behind On Buying A House

Buying a house is probably one of the biggest financial commitments a person may have to make at a certain point in their lives. For that very reason, you should ensure that you’re financially loaded before going house-shopping.

So take a look at the 10 quite subtle or common signs that you’re falling behind on saving enough for your dream home.

#1. You’re Behind On Down Payment

Most first-time homebuyers at the figure they are given for a down payment in order to get a house. Those who find it hard to save up to 5 to 20 percent required for mortgages, there is a federally funded program that permits new homebuyers to buy a house with a certain minimum down.

With the rising costs of homes in Canada, it is vital to know what you can afford and be able to have almost half of it covered.

Peter Grabel, managing director at Luxury Mortgage Corp. in Stamford, Connecticut, said: “If you have not been able to save up this amount, it could be a sign that you don’t currently have the financial stability to purchase a home.”

Unless you’re lucky to have someone grant you a gift in terms of funding, it is advisable to set up a savings strategy, minimize luxury spending and deposit as much as possible for your down payment.

#2. You Fail To Remember Closing Costs

Down payments are not the only thing you’ll have to put on the settlement table. Remember there are closing costs to consider and these costs vary depending on the property you choose to buy.

Will Johnson, founder of Sell and Stage Real Estate said homebuyers should expect to place between 2 and 5 percent of the cost of the home in closing costs.

Closing costs cover fees for running credit reports, analyzing your loan paperwork, attorney fees, termite and other pest inspections, the cost of recording your new deed with your city or country and many more other costs.

To help with closing costs, Will Johnson suggests that homebuyers should lower their overall debt, beginning with credit cards. Setting aside more cash from your monthly budget will give you a kick-start on the initial costs in buying your first home.

#3. Property Taxes

Property taxes vary depending on where you reside and how much you have to spend on your home. This can pose an extra burden on your monthly mortgage payment. Although it is an obligation that could quickly add up and may be ignored, it has to be considered.

One way to assist in this area is to consult an online tax calculator, in order to gather an estimate of annual property taxes in the area you intend to live in before you do so.

#4. A Lot of Debt

Buying a house requires a lot of financial scrutinies. Your present debts will be examined by a lender to ensure that you have enough in your monthly budget to sustain paying off your mortgage.

Naturally, a mortgage company will take a look at your total debt including monthly auto loan payments, student loans and credit card balances, to see if your total debt amounts to less than a certain percentage of your gross monthly pay.

To tackle any debts, it’s best to handle credit card balance first. Find other means to getting rid of debts early as it can really help you save on any added interests.

#5. Moving In A Few Years

Dave Jacobin, president of 1st Mariner Mortgage, a division of 1st Mariner Bank, stated that “Avoid buying a house if you’re not sure how long you will be in the area or if there are other pending factors in your life that might cause you to move.”

The recommended to time spend in an area before buying a home is three to five years.

You could spend the time renting and trying out new locations and styles before settling for a long-term commitment.

#6. Failing to Plan For Home Maintenance and Repair Costs

The case with renting and owning your home is different. When renting, property management is responsible for certain things like pest control. However, in the case where you own your home, you are your own landlord and are thus, responsible for maintaining and repairing the house.

To avoid, being overwhelmed by these costs, it is necessary to set aside some cash to cover them.

#7. No Emergency Savings Account

One sound financial strategy to inculcate is saving some cash for the rainy day.

Mortgage companies are keen on knowing the amount of cash left over in your bank account once all your settlement fees or debts have been covered. They want to know that there are cash reserves of six to 12 months.

However, it is still possible to qualify for a down payment assistance program even without any reserves. It is advised, though, to engage a real estate agent or mortgage lender to help you with an assistance program.

Meanwhile, be sure to create a reserve. You never know when you may need it.

#8. Starting A New Job or Self-Employment

The disadvantage with starting a new job is having to wait for a few months before filing for a mortgage as you will have to prove a consistent income. Although such a wait can be stressful, it may be in your best interest before ultimately buying a house. The same applies if you’ve relocated.

According to Jeffrey Taylor, co-founder and managing partner of home loan processor Digital Risk, “You’ll need two years of tax returns if you’re self-employed.”

Although you may be doing well in your business, your income will be analyzed from the past two years and an average income will be reached to see the amount you’ll qualify for.

Be sure to file your tax returns as soon as possible.

#9. Unstable Job or Industry

If you’re encircled with several uncertainties such as working in an unpredictable industry or not getting along with your boss, venturing for homeownership may not be such a good idea.

Buying a house requires a long process and it’s not as easy as it seems to sell out or find a renter.

Some warning signs to look out for before buying a house are not being you’ll stay in the area for the following years, seasonal employment or an unstable job in an unstable industry.

Being a homeowner is probably what most people dream of but for which demands a substantive amount of financial support and commitment. Do not rush into getting a home. Take your time in getting strong financially before taking the big step.