This is a question that is similar to the question that many young couples are asked after marriage regarding when they intend to start a family. Often the answer comes back that they simply can’t afford to have a child yet. Those of us who have been married, had children and survived financially know that the simple answer is always the same…”if you wait until you can afford to have children, you will never have children.” Somehow it all just works. I don’t mean to say that you can afford to buy a house at any time and that everything will work out, but please consider the fact that you might be over analyzing and yes, be overly cautious. People have ventured into home ownership without having all of their financial ducks in a row for, well, probably for ever.
Consider the following true stories.
In 1928, Henry and Nancy emigrated from England with their two young daughter. Henry was a veteran of WW1 and as such was eligible under the Soldier’s Settlement Act to buy land in either Canada or Australia at a low interest rate. They were able to obtain a sixty acre farm in Ontario and settled into their new life in Canada. One year later the stock market crashed and the Great Depression devastated the economy but Henry and Eliza were able to hold on to their farm and lived humbly but happily. In fact they stayed in that home until they were too old to maintain it any longer.
In 1951, James and Violet and their two young sons scraped together enough cash to put a very small down payment on a very run down house. It wasn’t a palace and it was a great sacrifice but it was theirs. They worked away slowly at doing repairs and when they had to leave it to relocate a few years later, they had a bit of profit to send them on their way.
In 1982, Roger and Hope bought their first home at the time when interest rates were averaging around 18%. They had three young children and thanks to a couple of government grants plus a tiny bit of savings combined with being able to assume the seller’s interest rate of 10%, their dream of home ownership came true.
Each of these couples became home owners against all odds. They faced challenges that seemed designed to derail their dreams but they were able to realize them. Of course in 1928 and 1951, there were no credit scores because there was very little credit and wages were low. In 1982, Roger and Hope did have good credit and good income but were stretched to the limit by high interest.
In 2017, you may feel like you are light years away from affording a house but if your credit and income are good and you can access a down payment of at least 5% of the purchase price, you may very well be able to fast track the dream and start making mortgage payments instead of paying rent. You may be able to invest in home ownership and begin building equity right away.
As a mortgage specialist, I will be able to work with you to find out if you have the basic necessary requirements that will get you on the property ladder and allow you to achieve this dream.