How to Prepare to be a Homeowner

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You’ve decided that this is the year you buy a home, but have you ever thought about how to prepare to be a homeowner? This will likely be the largest purchase of your life, so you won’t want to rush things. Owning a home is a serious decision, so you want to get it right.

Okay, so there’s no set formula when it comes to buying a home, but there are a few things you consider before taking the plunge. If you get your finances in order and research your options; you’ll hopefully avoid making costly mistakes when it comes time to close. Here’s how you should get started when you’re ready to buy a home

prepare to be a homeowner

Pay down your debt

First off, pay down any high-interest debt. If you’re carrying a balance on your credit cards that has a 19.99%+ interest rate, you really shouldn’t even think about buying a home. Those interest payments are insanely high and should always be paid down first.

Now think about your other consumer debt. It’s okay if you still have student loans and say a car loan, but what’s the outstanding balance? If you owe $60,000+, I don’t think it’s a very good idea to think about buying a home (unless you have a high income). You’re much better off reducing your debt first.

Of course, lowering your debt also helps you with the home buying process. Having less debt means you’ll have a lower debt-to-income ratio, which in turn would mean you can afford more home. It might even help you secure a lower interest rate

Start saving!

In Canada, you need a minimum of 5% saved of the purchase price to qualify for a mortgage. If you have 20% saved, you’ll avoid CMHC insurance, but I understand that saving that much can be difficult for many people.

If you want to prepare to be a homeowner, you’ll want to save as much money as possible. The easiest way to start saving more is to cut your expenses. Before I bought my home, I had unnecessary expenses such as cable and excessive eating out. I cut those and diverted that money towards savings.

One trick to make saving easier is to make things automatic. I set up automatic withdrawals for all my savings right when I get paid. Since those transfer happen right away, I never miss the money. I’m paying myself first!

Do your research!

Many people rush into the home buying process without even thinking about it. Again, this is going to the largest purchase of your life, so why rush?

Take the time to figure out how much it costs to be a homeowner. You’ll want to create a budget with all your anticipated expenses. Don’t forget to factor in your retirement savings, vacations, and the cost of having kids. Not sure how much you can afford? Use Rob Carrick’s Real Life Ratio as a reference.

You’ll also want to research how mortgages work. A mortgage broker (more on them below) will be able to walk you through the different options, but you’ll want to have a basic understanding of them first. Choosing the right mortgage could save you thousands of dollars; to learn more, check out my guide on the mortgage basics.

Assemble your real estate team

I talked about assembling your real estate team in an older post, but let’s go over it again. Having the right people work with / for you is paramount when buying a home.

First, you’ll want a mortgage broker. In most cases, they work with multiple lenders, so they’ll be able to get you the best rates. As mentioned, they’ll also be able to explain all the different details of your mortgage and help you choose the right one. Remember, the cheapest rate mortgage doesn’t automatically mean it’s the best option.

Obviously, you’ll want a realtor, but don’t just pick a random person. Don’t use your co-worker who’s a part-time realtor, or that family friend who only does deals in real estate on the other side of the city. You’ll want to work with someone who knows the neighbourhoods you’re interested in.

Finally, there’s your real estate lawyer. You need one to close your deal, but don’t underestimate their value. They’ll look over all the paperwork to make sure everything is good and then deal with all the closing procedures.

Final word

Again there’s no set way or formula when it comes to how to prepare to be a homeowner. The best thing you can do is just prepare yourself and not rush anything.

How to Prepare to be a Homeowner

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi


  1. Gary @ Super Saving Tips on February 6, 2017 at 12:27 AM

    Good advice. Just remember that even though you’ve assembled your “team” that they are also individuals who have their own interests. Don’t be swayed when the realtor or mortgage broker tells you that you can afford a much more expensive home. Be realistic about what you can afford and what you need.

    • Barry Choi on February 6, 2017 at 8:00 AM

      Hey Gary,

      Great point, my first real estate agent was terrible and really didn’t get what we were looking for. The experience was so bad that we put off home ownership for a few years. It’s important to vet the people you work with and as you stated, to figure out what you can realistically afford.

  2. Thomas on February 22, 2017 at 7:38 PM

    Also it doesn’t hurt to have a pragmatic approach. Well it is impossible to take the emotion completely out of the equation when buying a home, emotions can cloud rational decision making. Well one might want to live only in one particular neighbourhood, engage a particular realtor, or purchase a particular style of home, having a realistic approach and being open to possibilities you may not have considered is generally wise.

    • Barry Choi on February 22, 2017 at 7:40 PM


      You’re bang on there. For many people, getting over the emotional part of buying a home can be difficult. Although it’s not purely about financials, like you suggest, things can happen if you have an open mind.

  3. […] expert, I was quite familiar with mortgages, so there were no surprises for me. However, many first-time homebuyers may not be familiar with the process of getting a mortgage which is why I wanted to share some […]

  4. […] the costs listed above. Before signing on that dotted line to accept such a significant role, be sure that you’ve prepared yourself for these costs so that your biggest purchasing decision doesn’t become your biggest […]

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