Lisa Tollis, Real Estate Salesperson
1122 Wilson Street West. Ancaster, ON L9G 3K9
Phone: (905) 648-4451 Fax: (905) 643-7393 Email Lisa

Your Money Matters: Say 'I Do' to Home Buying

Getting married marks a huge milestone for many people who have spent years dreaming about being a husband or wife. Another major milestone that often follows marriage is the first "big" purchase, which is typically buying a home.

Buying a home is a great way to start married life together. Achieving the Canadian dream of homeownership together is a great accomplishment. It's exciting for newlyweds as they make the house their own by decorating and fixing it up.

More importantly, purchasing a home is one of the best investments newlyweds can make. It provides couples with the opportunity to build a secure financial future by building equity in a home. As newlyweds, your combined incomes offer a special opportunity to build savings that enhance your ability to buy a home.

Begin the process of buying a home by discussing finances. It's best to get in the habit of talking about finances regularly, as it's often a challenge for couples and is regularly cited as a leading cause in many divorces. Since you're already discussing wedding expenses, you can easily transition into how to finance a home-purchase.  

"Marriage provides a great opportunity to speak candidly regarding finances. Consider discussing the steps to purchase a home, paying down debt and improving credit scores," says Ennio A. García-Miera, a vice president with GMAC Mortgage. "Start focusing on the investment goal of owning a home by discussing your financial priorities with each other. Then seek the help of an experienced loan officer who can get you on the right track toward home buying."

As you discuss finances and buying a home, it's necessary to understand what goals are important to you and your partner. Draft a budget to map out where you'd like to be in a year, five years, ten years. It's not even too early to start thinking about retirement. Review your plan regularly, possibly with a financial planner, and update it as necessary. Start thinking about how much you can spend on a home. A mortgage qualifier calculator is available to you at the bottom of this page. Should you need to speak to a Mortgage Consultant or a Financial Advisor, I would be more than happy to help you. You may call me at (905) 574-4600,  so that can provide you with information directly to one of my Team Professionals who will help determine what you can afford and how much you'll need to save.

Make sure your budget is realistic to live by and allows for you and your partner to save for a rainy day as well as retirement. When preparing to buy a home, it's always best to be prepared to make some sort of downpayment, which may vary depending on the home you buy and the type of financing for which you qualify.  In addition to a downpayment, you'll also have to consider saving for unexpected home repairs and maintenance. Lenders generally like to see three to six months of living expenses in reserve, in addition to funds that will be used for a downpayment and closing costs.

Saving takes perseverance and discipline, especially when you're trying to pay for a wedding, and juggling other expenses such as college loans, a car loan, and rent.  One of the first places to look for possible savings is the little things you buy every day.  For example, giving up your daily $3 cappuccino can easily save you and your spouse $2,190 in a year.  It's also somewhat scary how many other small purchases such as CDs, video games, eating out, and going out to movies can add up. But they do.  Try to put off making other big purchases, which may require financing, until after the home purchase, as those purchases may affect your ability to obtain the best mortgage rate terms.

In addition to saving money, you'll want to review your credit score, which helps to determine the interest rate on your mortgage. Lenders assess your ability to repay your loan by reviewing your credit history. A credit score of at least 700 is an indication of good credit, which will allow you to secure a competitive interest rate.  

If you need to improve your credit score, consider these tips:

* If you have little or no credit, look for ways to improve your score such as opening a secured credit card with your bank.

* If you have "too much" credit, work on eliminating your credit card debt. Newlyweds can't afford to fall deeper into debt than they already are.

* If you know of errors or past due accounts that have already been paid, contact the three major agencies to correct this on your report. It may be a time-consuming task but in the end you'll be happy you took care of this before meeting with a mortgage lender.

Consult a Mortgage Institution!

Reputable mortgage institutions can help you understand the different products and loan options available to newlyweds purchasing their first home together. A mortgage lender can provide you with the key to buying a home, a pre-approval letter. Once you have the pre-approval letter, you'll know the price range of homes you can consider, whether it's a three-bedroom home in the suburbs or a trendy loft in the city.

Remember: a wedding is just one day, but your marriage is for life. Start your marriage on the right foot by preparing for the home buying process and achieving your goal of homeownership. By making home buying a priority, you can own a home even sooner than you might think. Call Lisa Tollis at (905) 574-4600 to discuss how you can start the home buying process.


Calculators


Let me help you find out what you can afford! My mortgage calculator will help you determine loan amounts, mortgage qualification, or whether you should be renting or buying.


Complete the fields below (e.g., Cost of Home, Down Payment, Monthly Income) and click Calculate Now. To view the different results of your calculation, click on the various tabs. To mail yourself a copy of your results, click the Receive this Detailed Analysis link.

Required Fields
Term In Years:     
Interest Rate:      %
Cost of Home:  $
Down Payment:  $  
Annual Insurance:  $  
Estimate Insurance to 0.43% of Cost
Annual Property Tax:  $  
Estimate Tax to 1.2% of Cost
Monthly Income:  $
Monthly Debt:  $
Optional Fields
Gross Debt Service Ratio (GDS):     
Total Debt Service Ratio (TDS):     
Condos Fees:  $
Results
  Receive this Detailed Analysis

Your Monthly Payments
 
Loan Amount:
Loan Insurance (%):
Total Loan (Mortgage) Amount:
 
Principal & Interest:
Homeowners Insurance:
Property Taxes:
Condo Fees:
Monthly Loan Insurance (%):
Total Monthly Payment:
Income Needed to Qualify for the Mortgage
Total Monthly Loan Payment:
Total Monthly Debt Payment:
Monthly Loan Insurance (%):
Qualifying Income of % GDS Ratio:
Qualifying Income of % TDS Ratio:
What You Can Afford
We are using the % ratio.
Cost of House:
Down Payment:
Loan Value:
Monthly Principal & Interest:
Monthly Insurance:
Monthly Property Tax:
Monthly Condo Fees:
 
Cost of House = [(Monthly income x Debt Ratio) – monthly tax – monthly insurance – condo fee] /
(monthly interest rate/ function of interest rate)
Renting
Monthly Rent: $
Annual Rental Increases:  %
Monthly Renter Insurance: $
Savings or Investment Rate:  %
 
Owning
Planned # of years in home: 
Yearly appreciation of the home:  %
Annual home maintenance:  %