When buying a home in Mississauga's competitive real estate market, it can be hard to know how much house you can afford. Before you even start the house hunt, you need a clear understanding of your budget; otherwise, you will spend time looking at property listings that are over and above your price range. If that happens, it is hard to see past the disappointment once you realize your expensive dream home is out of reach.
To get an idea of what you can afford, you will need to take the following into account:
• Your down payment
• Your household income
• Your current debts (liabilities) and your monthly payments associated with those debts
• Your estimated monthly housing-related costs, like your mortgage payment, property taxes, insurance, utilities, maintenance costs, etc.
• Your anticipated closing costs and other one-time costs, like lawyer fees, HST on a new home and moving expenses
• Your current spending practices
Essentially, you have to look closely at all of your expenses – because, no matter what, you still have to put food on your table, clothes on your back, gas in your car and have a little leftover for fun. And, let’s not forget putting money aside for emergencies and savings too.
The Canada Mortgage and Housing Corporation (CMHC) provides consumers with homebuying calculators that can help you understand how much house you can afford. They include:
• Mortgage calculator to compare rates, payment frequency, amortization and more to find your best mortgage options.
• Affordability calculator to find an estimate of how much mortgage you can afford.
• Debt service calculator to compare your monthly debt payments and housing expenses to your gross household income.
These online tools are a great place to start when figuring out mortgage affordability. There are several other factors that lenders consider, as well. It is in your best interest to meet with a mortgage broker or financial institution before starting your home search and get pre-approved for a loan.
As a realtor in Peel, I have established relationships with many trusted mortgage lenders across the region. These are professionals who provide my clients with the best advice and guidance for a positive homebuying experience.
To learn more about getting approved for a mortgage in Mississauga, contact me, Deborah Clerk, at Keller Williams Real Estate Associates, Brokerage, to get started.