Advice for Single Homebuyers – by Marc Shendale, Genworth Canada
Of all first-time homebuyers in Canada, more than a third are single. If you’re single and looking to make the jump into home ownership, the following information will serve as a convenient ‘To Do’ list to get yourself ready.
Study the market
Figure out where you want to live. City? Suburbs? Country? Get an idea of what places are selling for in your desired neighbourhoods. A good realtor with knowledge of the area can help with that. Next, figure out how much you can afford, and this is where my services come in handy. Remember to include estimates for property tax, utilities, insurance and any other expenses you don’t pay as a renter (condo fees, for example).
Assemble your team
A home purchase should involve financial, legal and real estate professionals. Especially if you’re a first-time home buyer. Buying privately is always an option, but there a lot of nuances that can get lost in the process. As a buyer, realtors and mortgage brokers typically don’t cost you anything, so it’s in your best interest to enlist their services.
If you don’t already work with a financial advisor, consider scheduling an appointment. Reviewing your entire financial picture—debts and assets, insurance and investments, as well as budgets—is something that a professional can help you understand and offer strategies to improve, based on your goal of home ownership
Create a game plan
Before you start looking at specific properties, you should probably get a copy of your credit report, available through Equifax (equifax.ca). A lender will want proof that you can demonstrate good credit management. If you have a history or late or missed payments, or if you have multiple credit cards with balances very close to or over their limit, this will affect your chances for qualification. If that’s the case, start a plan now to improve your situation. Pay down those balances. Keep on top of regular payments. A quick caveat…there is no quick fix for a credit report. Beware of companies that offer to “repair” your credit for a fee.
Cut back on expenses as much as possible before making a home purchase. Why? Finalizing the purchase involves closing costs that need to be paid before you’ll get your new keys. Homeownership will also bring new on-going expenses, such as property tax and utilities, so it’s good to have some cash saved up on the sidelines.
A couple months out, test yourself. Subtract your current housing costs from the anticipated new home living costs and put the difference in a high-interest savings account. If you can continue to get by without accessing the funds put aside, then you are likely in good shape.
Consider help from family
More often these days, first time home buyers are using the bank of mom and dad to come up with a down-payment. And that’s not a bad thing. If you have someone willing to gift you all or a portion of your required down-payment, that can make the difference between owning your own home and still renting your tiny studio apartment. Except in the case of some self-employed borrowers, most lenders will allow the entire down-payment to be gifted, as long as it is from an immediate family member – parent, sibling, grandparent or child.
While you may be single when you purchase the home, perhaps the stars align and you find that special someone a few years in. If you start a relationship and allow another person to move into your home, that person may eventually have legal rights in relation to your home. How does that happen? If you live together long enough, you and your partner may become common-law. When do you and your partner go from couple to common-law? In BC, once you’ve lived together for two years, you’re common-law. If you have kids together, you’re common-law.
How can first-time homeowners protect themselves? With an honest conversation about expectations and specific responsibilities. The main question is what will happen to the home if you split up? Consider a cohabitation agreement (again, with the help of a lawyer) to cover everything you agree to verbally.
Make sure to also outline the nitty-gritty details of day-to-day finances: how will you split the regular bills and when will they be paid? Which one of you will be responsible for making sure those payments are made on time?
There’s a lot to think about when you’re ready to purchase a home. Please contact me today and let me help you sort it all out.