First Time Buyers

Use these 7 steps...

Planning The Perfect Purchase

Every succesful venture begins with careful planning. Crystal offers some valuable planning suggestions for the most significant and rewarding financial venture most of us will experience.

Financial assessment.

Purchasing a home is a long term commitment. The cost is usually spread over many years, which means that your finances need to be in order before you buy. Take a close look at your savings account, debt load and emergency funds. As a rule and as most financial experts advise, you should spend no more that about a third of your gross monthly income on payments for your home.

Examine your credit history. Have you paid your bills on time? Have you ever declared personal bankruptcy? Considerations such as these can affect your ability to obtain a mortgage.

Consider also your employment history. Lengthy gaps will require explanations to your mortgage lender before financing will be approved.

The real costs of owning.

The word 'house' is automatically and often associated with "mortgage'. Your monthly mortgage payment will be the beggest cost of owning a home. It is probably the largest personal debt you will ever have.

But there's more to it. Owning a home involves other on-going cost. Property taxes are the largest of these expenses. As a rule of thumb, the tax on a house in Calgary is approximately one percent of the market value. For example, if your new home is $180,000, you will pay appoximately $1,800 in taxes each year. The City of Calgary offers a Tax Installment Payment Plan (TIPP), which permits you to pay your property taxes in twelve equal installments without interest or penalty.

Other on-going cost include utility payments(natural gas, electricity, water) and home insurance. Condominium buyers should be aware of 'condo fees' that usually include exterior maintenance cost, grounds keeping and perhaps some utilities.

If you're considering an older home, you should also think about a home maintenance savings account. Sooner or later, you'll need routine repairs to such things as the deck and fence or replacement of a hot water heater, furnace or roofing. Interior renovations may also be required or desired.

Don't forget the one-time additional cost that may come with owning ahome. For example, you may need a lawn mower, a ladder, new drapes, an appliance or two, sod.