would require you to stretch your finances. Crunch all the numbers. A common mistake among first-time homebuyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. Several additional fees are necessary to make a fair comparison, including principal interest, property taxes, property insurance, and ongoing maintenance.
Are you prepared for the down payment?
This lump sum payment funds your equity in the property (how much of the property you own). Down payments vary; 20% is preferred and gets the best rates. Some loans allow down payments as low as 5%. Sometimes relatives help with the down payment. If you have a choice, opt for a gift rather than a loan, as lenders will include the loan debt in their calculation of your debt-to-income ratio. According to CMHC, this ratio shouldn't exceed 44% to qualify for a mortgage.
Can you afford the monthly mortgage payment and its associated costs?
Generally, a mortgage includes the loan principal, interest, and property taxes. These items can affect the monthly loan-only payment by several hundred dollars.
Are you emotionally ready?
Can you handle the stress? A significant factor to consider when buying a home is the stress it can cause. The Holmes and Rahe Stress Scale, a landmark study on stress, ranks purchasing a house as one of the top 43 most stressful life events. Four events are specifically home related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such as marriage (No. 7),
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