Building a Nest Egg To buy a Home

With the new income and down payment regulations in Canada it is very important to “think out” the process of buying a home. The first step is to be aware of the financial requirements as well as your own financial situation.

Number one priority is to speak to a mortgage broker, or your bank. Discuss the requirements for a mortgage given your family income and expenses. If you are capable of sustaining a mortgage then you will have a starting point for determining a price that you can afford to pay. Again your mortgage broker or financial advisor can help you determine the down payment and the closing costs that you will face with the home purchase. Remember to include the recent limit placed on down payments. The Canadian government has established the need for individual home buyers to qualify for home purchases based on an interest rate of 4.61%. This is an attempt to ensure that home buyers will not be short as the interest rates rises to higher levels.

Another significant consideration is the plan to eliminate the need to pay for mortgage insurance with CMHC. If home buyers are able to raise a down payment of 20% or more the buyers will not be required to pay the 2-3% insurance fee added to their mortgage payments. Reaching this goal will add to your protection against the inevitable increase in mortgage rates.

If you have arrived at a figure that will enable you and your family to purchase a home that will meet your needs your task becomes one of planning a way to achieve your goal – raising the funds necessary to make an offer on home purchase.

There are many strategies that will help you reach your saving goal. The following are only some of the possibilities.
1. Regular deductions from your pay check into a savings account. You can determine this
amount by setting out a household budget and following it.
2. No amount should be considered too small as “new money” or “unexpected money” enters your
household income. This approach will assist you in remaining focused on your goal over time.
3. Take a picture of a home similar to the one that is comparable to your “dream home”.
Paste this picture in our bedroom above a slotted container that you can deposit coins, You
will be surprised how much a good sized container is able to add up to a few hundred
dollars.
4. From time to time review your lists of wants and needs; by cutting down on wants you will
be able to save a few more dollars each month.
5. Again speak to a financial advisor to determine which financial investment tool to save the
bulk of your nest egg.

One last suggestion to those of you looking to purchase your own home. Try not to obsess over this task at the expense of your family and social relationships. Try to remain focused on the quality of life issues that in the end are the real priorities for you and your family.