What to Consider When Buying a Home + Coping with the Stress

1/23/2021

|Whether you are a first-time homebuyer or you are considering purchasing another property to either upgrade your current lifestyle or to have an income-generating property to rent out, the process of purchasing a home can be exciting... and stressful!

There is a lot to consider from choosing a location and type of dwelling, to figuring out finances and affordability. Luckily, there are many resources and professional advice online that can help make this process at least a little bit less stressful. In this article, let's explore what to consider when buying a home and how to cope with all the stress along the way.

Please note: This article does not contain legal, financial, real estate, healthcare or therapeutic advice. If you are concerned about your health or well-being, speak with a health professional or visit your nearest medical facility in an emergency. This is a collaborative article.

What to Consider When Buying a Home
+ Coping with the Stress

For many, homeownership is such an exciting concept. You get to own your own place, decorate it the way you want, renovate it to suit your tastes, and create memories that can last a lifetime. For others, the thought of owning a place can bring a lot of anxiety and stress, especially if the whole process feels overwhelming.

A great first step to start at when considering homeownership either for the first time or for a second or third time can be discovering your 'Why'. Take a moment (and a deep breath) and consider why you want to be a homeowner. Is it simply to have a place to call your own? Is it to have a bigger place to grow into with your family? Or perhaps it's to create another form of income from a rental suite or property?

Figuring out your why when it comes to homeownership can serve as an anchor to help steer you in the right direction when it comes to all of the choices you can make along your real estate journey. Let's briefly explore several scenarios and reasons that Canadians often make the switch from renting to owning a home, or from homeownership to asset-building real estate portfolios.

First Time Homebuyers

Currently, in Canada, the First Time Homebuyers Incentive offered through the Canadian Government helps qualified first-time homebuyers reduce their monthly mortgage payments without adding to their financial burdens. This incentive is a shared equity mortgage which means the borrower assumes a percentage of the appreciation (or depreciation) of the property value.

There may be other incentives for those who are stepping into the real estate market, too. In British Columbia, first time homebuyers can apply to reduce or even eliminate the amount of property transfer tax that would otherwise need to be paid on their first property.

Another option that first time homebuyers might want to take advantage of, especially when it comes to funds for a down payment, is the Home Buyers' Plan (HBP) which allows withdrawal of funds from an existing RRSP (Registered Savings Plan). As with any of these incentives or plans, it is important to research and talk to a professional to find out if these programs fit.

Upgrading to a Larger Home

The pandemic has caused many individuals to slow down and take a step back to survey their current lifestyle. Those who once sought a city life for high paying jobs or the convenience of having a Starbucks at your doorstep may be looking to move away to a quieter, family oriented suburb, or even a different province altogether.

In general, moving away from the city or buying a larger home can create a lot of positives for an individual who is ready to slow down or start a family. And there are so many ways to create the conveniences of city life in a larger place. For example, many people are turning guest rooms into home gyms, or an extra closet into a remote work station. Missing the bar down the street? Build a cute bar cart from Ikea furniture hacks. Missing your morning Venti Starbucks? Create an adorable coffee cart. You can be super creative in making a home you love without missing out on anything.

Income Generating Rental Properties

You may even be considering a property that already has a leased tenant in a legal suite or one half of a duplex, for example. Depending on your plans for the property, this can be an easy handover and instantly be generating you extra income from the rental fees. Or, if you have plans to renovate or rent to a family member, this could be a much more complicated scenario if you need to end the tenants lease.

In 2016 nearly one-third of all homes in Canada were rental properties (Statistics Canada). The benefits of renting to others can be lucrative over time, but be sure to research and consider your own risk tolerance for purchasing a property that you intend others to live in and the cost of maintenance, upkeep and renovations over time.

Finances

The Bank of Canada has recently committed to maintaining the overnight rate at 0.25% until inflation reaches the targeted 2.0% rate (Statistics Canada). This means that banks and mortgage lenders are able to offer low interest rates on mortgages, which is beneficial for anyone looking to purchase a home but also includes individuals who are looking to refinance their existing mortgages.

It might be tempting to start scouring real estate websites and find your dream home, but before you get your heart set on a particular property, consider getting started with a mortgage calculator. This is a quick and easy calculation to find out if you are ready for homeownership (or a bigger place). It only takes a few minutes to fill out and allows you to download an amortization schedule detailing each periodic payment on an amortizing loan.

The next step will be the mortgage pre-approval. This process will reveal just how much mortgage you qualify for, and what your expected monthly expenses will be.

For renters who generally have a fixed monthly payment, homeownership can come with a lot of unexpected costs (eek).. so doing your research on the finances can help ease some of the stress of finding out about these extra costs early on.

Find a mortgage lender or bank who can help you through the mortgage pre-approval process. Gather the following information about your circumstances to be prepared:

Government issued ID – passport, driver’s license
Proof of employment/income – paystubs, bank statements, income tax returns
Proof you can make down payment and closing costs – savings accounts
Information about debts and financial obligations
Supporting documents about other assets

Once you have gone through these first steps of considering the type of property you want to purchase, discovering your 'Why' for buying a home, and have started the pre-approval process, you should start to be able to take a sigh of relief, and then call a real estate agent to start the house hunting search.

This process can be stressful, but it can also be exciting. You work hard and deserve a home that you can call your own, or to have an income-generating property to help increase your wealth so that you can spend more time with those you love or doing activities that bring you joy.

After reading this article my hope is that you are feeling at least a little more prepared, and bit less stressed about buying a home. Just like other challenges or milestones that happen as we go through life, buying a home doesn't have to be a monumental pile of anxiety and overwhelm to get through.

Buying a home can be an exciting and worthwhile process that can leave you with a feeling of satisfaction and accomplishment. Be sure to do your research and ask for support along the way and you will find the home of your dreams, or a property that can help you build wealth, sooner than you think!

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