7 Reasons To Put Off Buying Your First Home

You’re tired of renting, we get it. No one wants to be paying off someone else’s home forever. You’re itching to get into your own home and put your own money into something that is yours. You're thinking about buying your first home, but is it the right time?

As the old saying goes, good things come to those who wait. Ensuring your financial situation is primed for the purchase of a house can make sure the experience of homeownership is that much more pleasant, that much less expensive, and just a little bit easier. Here are some reasons why you might want to wait before taking that big step and buying your first home:

1. Your credit score isn’t as good as it might be with a few months of hard work

It’s important to approach your first home purchase with the best credit score you can possibly muster. Why? Because the higher your credit score, the lower the interest rates will be on your mortgage. This alone can save you tens of thousands of dollars over the next 25 years. If you’re interested in bettering your credit score, consider a credit building program from Refresh Financial. It requires no money up front, and all your on-time payments will be reported to the credit bureaus just a loan. The best part is that the payout acts as security funds for the loan, so when you’re done paying it, you have a chunk of money to add to your down payment. Click here for more information about Refresh's credit building program.

2. Your debt-to-income ratio isn’t great

Your debt-to-income ratio is a number of debt payments you have to make each month versus the amount of money you bring in. If your DTI is too high, you might not even get approved for a mortgage.

3. You don’t have a sizeable enough down payment

If you can see yourself saving enough to have a 20% down payment, why not take the time to do so? Once you hit that 20% mark, you no longer have to pass the mortgage stress test and you don’t have to pay mortgage-default insurance. Take some time to save as much as you can for a down payment before you go house-shopping.

4. Your credit usage percentage is too high

If you’re using above 30% of the credit you have available to you, your credit report could look like that of someone who lives outside of their means. It paints a picture of a high-risk borrower. It is a good idea to take some time to bring your credit balances down below 30% so lenders can see you are someone who knows how to manage their credit.

5. Your monthly income would be almost entirely absorbed by your mortgage payment

If the potential mortgage payment you’re facing is soaking up all your incoming funds after your other necessary expenses, you should reconsider that home. All it would take is one small hike in the interest rates and you’re going to find yourself unable to meet your financial obligations. Lower your budget or wait until you can free up some extra monthly cash flow.

6. The market in your area is not good

If you’ve found that the only houses available in your area are out of your price range, you could find yourself in a situation you can’t handle. Don’t let yourself be talked into a house you’re unsure of just because you can afford it, and don’t let yourself be talked buying your first home, when you can't afford it. Be patient and the right house will come around for you. And in the meantime, save more money and try to increase your monthly income.

7. You can’t see yourself being able to afford serious home repairs

If buying a house is the end of your money and any major repairs on your new home would put you in the red, take some time to save an emergency fund on top of your down payment for buying your first home.

Some people rush into buying a home just because they have a down payment saved, and don’t give much thought to any of these other factors. This can lead to foreclosures and bankruptcies. Taking a step back and considering these 7 points can save you money, headache, and pain in the future.

While on the whole, Canadians are getting better at making their mortgage payments, we still need to worry!

Many Canadians tend to cut it close when it comes to their financial margins. Nearly half of us are only $200 away from not being able to meet monthly financial obligations. Debt is continually being accumulated and so many of us are on the verge of defaulting. So the question is, why should we worry when headlines say that Canadians are getting better at making their mortgage payments?

Living Within Our Means

Making your mortgage payments is a great thing and it indicates that you take this obligation seriously. However, while Canadians are reliably making their these mortgage payments, we are still living beyond our means and failing to reduce debt in other areas of our lives. We prioritize our mortgage obligations, but what about credit card debt, or car payments?

All debt needs to be a priority, and if mortgage payments make it difficult to reduce debt in other areas of your life, then it might mean you have to start earning more or sell your house.

Reflecting Your Income

Your lifestyle should reflect your income. Ideally, you should have the means to feed, clothe and house yourself while also being able to make all of your monthly bills and obligations.

When mortgage payments cause other financial obligations to take a back seat, it's a sign that you could be living beyond your means. Whether you decide to live off credit and stay in a home that you cannot afford or sell your home to get something that fits your budget, either way, the home will no longer be yours unless something changes.

Making a Change

Selling your home can be difficult, but in the long run, it’s easier than dealing with a mountain of accumulated debt. Be proactive, take control and find a way to live within your means.

The path that leads towards a healthy credit score and financial freedom is the one you will want to pursue.

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If poor credit means home ownership is out of your reach right now, start making plans to improve your credit now! The sooner you start building credit, the sooner you will qualify for lower interest credit products like a mortgage! Refresh Financial has a credit building program that can get you into a mortgage sooner than you thought!