Whether you’re a first-time home buyer or not buying a home could take months or happen instantly. The idea of buying a house is fantastic especially when you get to look at local listings in your area.
The process becomes real once you begin looking to hire a real estate agent and looking for a mortgage broker.
Today I want to talk about ways to reduce stress when buying a home. As an experienced buyer from a young age, I suffered from anxiety and needed stress management to get rid of the jitters.
Taking The Canadian Stress Test
The Canadian Stress Test is also part of buying a home which takes into consideration your debt to income ratio.
Going through the stress test process allows the lender to find out what would happen if you lost your job, became ill or situations that would affect your income.
Essentially, can you handle it and what would you do?
Starting in 2018, all Canadian buyers who are applying for a mortgage from a federally-regulated lender are now required to undergo the OSFI Mortgage Stress Test, including those who put at least 20% as a down payment.
Loans Canada – The Canadian Mortgage Stress Test 2021
Let’s dive in a little deeper into educating ourselves about ways to reduce stress.
Reduce Stress Home Buying ProcessWays To Reduce Stress For The Home Buyer
Emotions play a huge role when searching for a house to call home. Buying a home in an emotional state could cause you to become house poor.
This is why it’s important to not rush into buying a home if you aren’t ready. Becoming a home buyer is not the end-all-be-all of adulthood, trust me.
I bought my first home at the age of 21 and then my second at 24. Were there things I could have done differently?
Sure, however in a not-so-financial way I created a process that would reduce stress.
Being a young homeowner allowed me to put my money to work building equity. The hard part was finding the right house along with many reasons listed below.
Stress and anxiety when buying a house creep up for many reasons;
You’re making one of the biggest purchases of your life
Worry about buying a lemon where renovations eat up your savings
Ability to get a pre-approved mortgage
Is my credit score good enough?
Can I/we afford the house we are buying?
What if something happens to your employment status?
Are the neighbours creepy?
You’re moving to a new city or away from family
How much will mortgage insurance cost us?
There are other reasons however finding ways to reduce stress will take a weight off your shoulders. Moving to Canada from the UK wasn’t near as stressful as buying our first home.
I didn’t understand the real estate process in Canada but luckily Mrs. CBB had been through it. Often times we learn from experiences that are either good or bad.
The ideas of how to reduce stress below comes from her experience and than our experience of home buying in Canada.
Reduce Stress By Securing A Mortgage Pre-Approval
Making an appointment with a mortgage broker or mortgage specialist at a Canadian bank is step 1.
If you’re not sure about the process of buying a home the specialists can walk you through the mortgage process.
Another way to find out if you qualify for a mortgage is by using a mortgage qualifier tool. Just remember that it’s a tool and you’re getting estimates based on the information you input into the system.
We offer this mortgage calculator as a self-help tool for your use. This tool does not replace professional financial advice. We cannot guarantee that this calculator will apply or be accurate in your situation. For example, your mortgage lender may make its calculations in a different way. All calculations are examples only.
House Insurance Estimate
House insurance is not something you’d like to have it’s something you MUST have. Shopping around for house insurance that fits your budget is what you should do.
Comparison shopping for just about anything you need to buy for your home will net you the best prices.
House insurance is a policy that protects the homeowner in the event that something should happen.
For example, if you have a house fire or even if your home gets broken into. You could have a flood in your home or a tree fall on your house. What if a car drives through your garage or lands on your roof.
Anything can happen and house insurance is there to protect your investment.
As well, consider buying life insurance instead of mortgage insurance.
Life insurance pays the entire policy amount where mortgage insurance only pays what’s left on the mortgage loan.
Another debt that comes with buying a home is the costs of property taxes. Your real estate agent should have that information when you begin your home search.
If you’re starting the process of mock budgeting to own a home call the city or ask your agent for estimates.
Depending on what part of the city you plan to live in, the value of a home, the size of a home and renovations that have been done the property taxes can fluctuate.
You’ll receive an MPAC statement every 4 years that will explain to you what they value your home at.
How To Hook Up Utilities
Understanding the process of hooking up utilities before you purchase a home is smart.
All you have to do is call the utility company that you plan to hook up and ask them about the process. You may also find out that you need to put down a deposit before they will hook anything up.
Most often this is just emergency money just in case you don’t pay your bill.
Once you understand it will reduce the stress of not knowing what extra expenses you may have when moving in. You’ll also learn the best time to turn on the utilities and set up the account.
Common utilities in Ontario would be Electricity, Water, Gas and Telecommunications (internet, cable, telephone etc.)
First Time Home Buyers Plan
The first time home buyers plan is for someone who is purchasing their first home.
Am I eligible to participate in the Federal HBP?
Well, yes and no depending on a couple of factors.
You are a First Time Home Buyer
You must have a written agreement to buy or build a home for yourself.
Unless you are a person with a disability or you are helping a related person with a disability buy or build a qualifying home, you have to be a first-time home buyer to withdraw funds from your RRSP(s) to buy or build a qualifying home.
Canadian Budget Binder – The Home Buyers Plan
Create A Mock Mortgage Monthly Budget
What is a mock mortgage budget?
This is where you create a monthly budget based on owning a home with the mortgage a bank or broker will lend you.
Consider everything that you would pay for in a house and see if you can handle that budget for a few months.
I detail the mock budget process in a recent post,
Related: 8 Expenses To Expect As A New Home Owner
Hiring The Right Realtor Will Reduce Stress
The best realtors to hire are those who want to work hard for you. Before hiring a real estate agent consider getting referrals from friends, family or colleagues.
Make sure they’ve used the realtor that they are suggesting and ask them why they are referring them to you. Once you find a few real estate agents be fierce and interview them for the job.
Yes, hiring an agent to work for YOU is a big deal and you want the best not the agent who is money hungry.
By doing so this will reduce stress because your agent will do all of the hard work for you such as negotiating, paperwork and setting up visits to view the houses.
Don’t Look At Houses For Sale Outside Of Your Budget
If you know that you have a mortgage budget of x amount of dollars don’t look at homes you can’t afford.
Being house poor is a bad position to be in and you could lose everything if you can’t pay the bills.
What would be smart is if you are a couple to buy a home on one income if that’s possible. This is what we did and thankfully so as Mrs. CBB lost her job three months into owning our home.
As well, looking at homes that are not in your mortgage range can be depressing and increase your stress.
Stick to what you can afford and consider the options of each home you visit.
Create A List Of What Home Features You Want
Create Goals for buying a new home to help reduce stress
Before you start booking appointments to see houses for sale that you are interested in create a list.
When you set goals and create lists detailing what you want in your new home it makes the process easier. For example, if a walk-out basement is a must then you won’t look at houses without one.
Another example is if you’d like a home with a rental unit in the basement.
You don’t want to waste your time and increase stress levels by looking at homes that don’t fit your needs.
Be Open To Negotiations
Negotiating price with home buyers and home seller
Negotiations are a big part of the home buying process where the buyer and seller finalize a purchase price.
If you have a real estate agent they will be your communicator or if you are using a for sale by owner you’ll be taking the wheel.
However, if it’s a buyer’s market as it is now you must go in with your highest and best price. For example, many houses in our area are going for $100,000 to $300,000 over the asking price and with no home inspection.
Be wary and if it’s too stressful for you then put buying a house on hold until a shift in the market happens.
Meditation To Reduce Stress
One thing that helps both Mrs. CBB and I to reduce stress in our daily lives is meditation.
For her, she likes to go for a walk by herself and shut her mind off to everything but what’s around her.
She comes home with a clear mind ready to tackle the day or the next morning. My stress reliever is the gym as I’m sure it is for many people.
I like to go for a run or sit alone on the back deck to meditate just as the lady in the photo above is doing.
Whatever it takes to reduce stress when buying a house doesn’t have to take hours. It’s a process of being alone and focusing on something else other than the stress.
Look At The Potential Of A Home
painting and renovating new home
Before walking through a house or attending an open house keep your mind open. There will be imperfections in every house even brand new homes.
Look at the home without the furniture and decor and imagine your stuff inside. Consider what changes you’d like to make, perhaps a new kitchen or coat of paint.
Don’t walk away from a gem just because you see dirt or the owners belongings.
Hire A Home Inspector Or Trades Experts
Home Inspection to reduce stress when buying a home
This is something we will certainly change when and if we buy a new house. We went with a home inspector that was recommended by our real estate agent.
Don’t ever do this.
If you want a home inspector find someone on your own or a referral from a friend.
Even better is if you have friends who are in the trades that could inspect your home for reduced prices.
Employing various tradesmen to go through the house is the best process and better than any home inspector will be.
Don’t jump into the home buying market unless you can reduce stress and look at the big picture.
There are many things that can go right when finding your first home or final destination.
However, there are many problems that could surface if you don’t face all of the obligations beforehand.
In other words, make sure 110% that you can carry a mortgage and prepare for renovations and home maintenance even through a storm.
Discussion: What other suggestions would you have to reduce stress when buying a house? Leave me your comments below and I’ll respond.
The post How To Reduce Stress When Buying A Home appeared first on Canadian Budget Binder.
#RealEstateAndMortgage #ReduceStress #MortgageLender