The question "should I buy a new home" should be easy to answer, right? I mean, don't you just know when it's time to move into a new place?
For some people, it's an easy answer. Others, however, can find it very difficult to decide whether or not they should move into a new home.
This article is written to guide you into being more sure of your decision. Sometimes buying a new home is definitely the right move! But other times, holding off on moving may be the right call. Let's see what criteria you should consider!
Take a Good Look at Your Current Living Situation
If you are on the fence about finding a new home, the first step is to take a careful look at your current living situation.
Moving can be a tiring and laborious process, and if you are relatively comfortable where you are right now, you really have to think about whether moving would make a minor difference or lead to major improvements in your life.
Do you need extra space imminently (perhaps for a new child)? Are you moving because you're simply curious about a new neighbourhood? The possibilities are endless, but it is important to keep in mind how necessary it is that you move *now*, or if you can wait until the time is right.
Learn about the Current Housing Market
For most people, the purchase of a home is one of the most expensive investments they will ever make, so looking at the state of the housing market is always a great idea when contemplating buying a new home.
For decades owning real estate was viewed as a safe long-term investment. But the unpredictability of the economy, and more specifically the housing market, has challenged these norms. Do research to see how the housing market is doing in your country and whether experts are saying it is a good time to buy - it could save you a lot of time and money.
Learn about the Current State of the Economy
Breaking news: the economy fluctuates.
But seriously, similar to looking specifically at the housing market, taking a step and learning about the state of the economy in your country is always beneficial when considering the purchase of a home.
There are years where real estate prices are shockingly low, and others where they skyrocket. A buyer's market, where real estate prices are low, is normally a good time to buy, so do some research and see if we are currently in this economic state.
Interest rates also fluctuate year to year, so looking at current interest rates is also highly beneficial. If interest rates have been declining for some time, it may be best to wait and get the best deal you can.
Another very important thing to consider while thinking about moving is the time of year. Springtime is typically when most homes are on sale, so you may have the largest selection during this season. Winter could also be an excellent time for house hunting, as less traffic means that sellers may be more flexible on price.
If you have any questions about these steps, feel free to reach out to any of our Qube representatives by clicking here! We would be happy to address any questions you may have.
Understand your Debt-to-Income Ratio
If you currently have the cash to put up for a new home, then you can basically disregard this part! The thing is, most people are not in a position where they can fully pay for their new home right away, so before making a decision to move, it is imperative to understand your debt-to-income ratio before looking at homes and applying for mortgages.
Very basically, the DTI ratio is used to determine if the person borrowing the money will be able to repay their monthly installments. The Federal Housing Administration (FHA) recognizes 43% as the standard debt-to-income ratio for approving mortgages. While all lenders are different, having a DTI ratio of over 43% may be a sign that purchasing a new home may not be worthwhile with your current finances.
Let's go through a brief example of how you can calculate your debt-to-income ratio.
Say, for example, your monthly gross income is $5000. By multiplying this number by 0.43, you get $2150, which is the maximum amount you should be spending on debt payments every month. Any more than this amount, and your DTI ratio may be too high to get accepted for a mortgage.
What Will You Do With Your Current Home?
If your finances check out, the economy and housing market are in the right place, and you personally feel like buying a new home is the best move for you, then the process begins! Exciting!
Before you kick off the process of hiring a broker and looking for homes, you should definitely think about what you will do with your current home. You can totally skip this part if you are moving out of an apartment with a set lease.
Any proceeds you get from the sale of your current home should definitely be put into a savings account, as this will definitely help you afford your mortgage.
While looking for a new home and selling your current one should be done somewhat simultaneously, you never want to be in a position where you purchased a new home and have not yet sold your own. It is likewise bad if you sell your house, but have not yet found one to move into.
To learn more about the home selling process, click here.
To answer the question "should I buy a new home?", there are a few factors that you absolutely need to take into account.
Think about your current living situation and how imminent it is that you need to move into a new home
Learn about the current housing market and the state of the economy in your country to know if now is a good time to buy a home, or if you should wait
Understand and calculate your debt-to-income ratio
Know what you will do with your current home during the homebuying process
If you need to sell or buy a home, a Qube REALTOR® can help you navigate the market safely and with professional insight. Qube supports Quebec residents by providing full-service real estate experiences with incredible rewards: sellers save thousands in commission and buyers receive cash back when they purchase a home with one of our REALTORS®. Visit our website here or call 1-877-410-7823 to learn more.