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The Right Time to Buy a Home
The right time to buy a home is when you feel it is the right choice for you and when you can afford it. Both of those prerequisites are more complex than they seem. This is likely the biggest purchase you will make in your life. When you are considering whether to buy your first home, it is a good time to sit down and talk with a financial advisor.

Should you buy?
Any advisor you consult might pose a question that will surprise you: "Is buying a home the right way to go?" Of course, buying a home is a lifestyle choice, but sometimes, when you look at the full financial picture, you find out it's a lifestyle choice you can't afford.

An advisor can help you assess all the costs, and determine whether it makes sense for your budget. What expenses will you have to give up in order to afford a home? Where are you in your career? Is there a chance you might be moved to another city or country within the next five years? If so, buying might not be such a good decision.

Real estate market cycle
Real estate markets, like stock markets, run in cycles of peaks and valleys. You can't count on real estate as a growth investment any more. You are most vulnerable to this boom and bust cycle when you buy your first home. If prices are at a peak when you buy, it could be years before your home is worth as much as you are paying on your mortgage. Do some homework. Ask an agent about how real estate prices have fluctuated in your area over the past five years.

Of course, rents can also escalate according to market conditions. If you can carry a mortgage for about the same amount you are paying in rent, chances are that home ownership is a good choice.

Can you afford it?
An advisor can help you go in with your eyes open. Too many young people buy a home that is well above their means, because they look only at the mortgage costs and don't take into account the taxes, utilities, renovation and upkeep of a home.

A member of Advocis can create a financial model that will outline all the costs you will face, including the cost of carrying a mortgage five years from now, not just in the next six months. When you buy a home, you need to consider either mortgage or life insurance to protect your partner if you should die. And you should look at how this big new expense will affect your retirement savings.

Once you know the full cost, you're ready to go shopping. Shop for a mortgage before you settle on the house – let the bank know how much your advisor says you can afford. Then go out and look, with the confidence that the home you choose is within your means and the time is right for you.

“Outliving your income is not an option.”

Raymond E. Jackson Retired

Simon J. Jackson, CFP, CPCA Senior Financial Advisor, Manulife Securities Incorporated Life Insurance Advisor, Manulife Securities Insurance Inc.