80 % of consumers believe buying a home is a good financial decision, but that doesn’t mean that it’s easy to know when the time is right to take the leap.

When considering to give up the renter lifestyle for the long-term home ownership investment, here are some of the questions you should ask yourself:

1. How do home prices and rents compare in your community?

While it’s easy to compare rental prices, when you look at the cost of buying a home you need to include not only your mortgage principal and interest payments, but also homeowners insurance, property taxes and possibly a condominium or homeowner association fee. A rent-or-buy calculator can help with your evaluation. You should also look at the long-term wealth-building benefit of home-ownership that comes with rising values and increasing your equity as you pay off your home loan. This survey is a little dated but a  2010 Survey of Consumer Finances from the US showed that the median net worth for homeowners was 30 times higher than the median net worth of non-homeowners.

2. Are you emotionally ready to buy a home?

One of the benefits of renting an apartment is that you typically only commit to a lease for one year. If you’re buying a home, you’ll need to choose a neighborhood and a home where you want to live for the next several years while you recoup the cost of buying and build equity.  If this kind of commitment causes you stress, you probably aren’t ready to make the move.

3. What is you five year plan?

While no one knows with absolute certainty what will happen over the next five or 10 years, if your plans include switching careers or moving out of the province or even the country, you’re probably better off renting. If you plan to start a family in the next few years, you should take that into consideration when developing a budget and choosing a home.

4. Are you ready and able to take care of a home?

Along with the joy of decorating your home and changing it to meet your needs, you need to budget at least 1-3% of the home price each year for repairs. If you can’t handle work yourself you should be prepared for the expense of maintaining your property so that it can keep its value and avoid more costly repairs in the future.  If you are able to do the work yourself you still need to budget the time to keep up with needed repairs in order to maintain or even increase the value of the home.

5. Do you have any savings?

While there are loan programs available to some borrowers with a down payment of 5%, you’ll need some cash for a deposit, a down payment, closing costs and an emergency fund when you buy a home.

6. What does your credit look like?

Request your free credit report at both Equifax and Transunion to check for errors and any negative information on your report. For a small fee you can also get your credit score. Lenders typically require a minimum credit score of 620 or 640 and higher for government-insured loan programs, but for optimum flexibility the ideal credit score is 680 or above.

7. What can you comfortably afford to spend on a home?

You can have a free consultation with a mortgage broker, like me, to find out how much you can borrow to buy a home, but you should also develop a household budget to determine how much you can spend on your housing payment while still being able to pay your other bills and save for the future.

This of course leads to the question of will your budget accommodate the type of home you want?

Your answers to these questions and consultations with professionals such as a mortgage broker and a Realtor can help you make the right choice and determine if you’re ready to buy now or need to wait a little longer to become a homeowner.

Contact me for a free, no obligation, consultation.

“It always seems impossible until it’s done.” — Nelson Mandela