Are You Financially Ready To Buy a Home?

Are You Financially Ready To Buy a Home? Here is a chart for simple calculations
So, you've decided that homeownership is right for you. Now you need to determine if you are financially ready to buy a house. In this Step, you will find a number of simple calculations that you can do to evaluate your current financial situation, how much house you can afford and the maximum home price that you should be considering.

Test Yourself

To avoid any future surprises, you can do some financial exercises to see where you stand. They include calculating your net worth, determining your current monthly expenses and what your current monthly debt payments are.

Knowing your net worth (Your financial worth, calculated by subtracting your total liabilities from your total assets-see working chart below) is important because you will need this information when you discuss a mortgage (is a security for a loan on the property you own. It is repaid with your mortgage payments which are usually blended payments. This means that the payment includes the principal amount borrowed) plus the interest (the charge for borrowing money). The payment may also include a portion of the property taxes.

Your net worth is the amount left over once you've subtracted your total liabilities from your total assets. It will also give you a snapshot of your current financial situation and show you how much you can afford to put as a down payment.


SCROLL DOWN TO SEE TABLE

ASSETS	Column 1	Column 2	Column 3
Value of property you own	$
Value of vehicles you own	$
Amount in savings and chequing accounts	$
Savings certificates, bonds, etc.	$
Amount in other bank accounts	$
RRSP funds that you can use for your down payment	$
Other RRSP funds	$
Investments, stocks, mutual funds	$
Other assets	$
Total Assets(Put in column 3)			$
LIABILITIES
Any loans for property you own $		$
Car loans		$
Personal loans or lines of credit*		$
Credit cards*		$
Student loans*		$
Other loans		$
Total Liabilitesput in column 3			$
NET WORTHadd column 3			$

* For lines of credit and credit cards, some financial institutions consider the credit limit while others consider the balance owing. If you are unsure about what your financial institution looks at, you might want to use the credit limit for your net worth calculation.