Budgeting

When you are going to go and buy your home, there are a few extra costs that you might not consider. For example, I've mentioned lawyer fees and home inspections in previous posts. All of these costs can add up quickly. They can eat into your downpayment, and although you may be approved for a larger amount, you likely want to keep your mortgage to a minimum.

I would say that you should plan to spend between 4-5 thousand in cash, outside of your downpayment. Why is this important? Well, if you are planning to take advantage of the Home Buyer's plan, you will need cash to pay for your deposit (usually about $2000), plus things like home inspections and lawyer fees. These items add up quickly and you may not be able to get the cash out of your RRSP's quickly enough to close a deal. The last thing you would want is a house of your dreams slipping through your fingers because you have your money "tied-up".

This is also important when it comes to mortgage insurance. Canada's mortgage system requires that you purchase insurance on a mortgage where you do not have a minimum of 25% deposit. 25% deposit is a very large sum and if you are near that amount, you'll want to ensure that you will have enough cash to pay for any extra costs that might incur. You don't want to buy the insurance because it gets expensive in the long-run.

Now, I'm being conservative by estimating $4-5K. You will likely not need this much cash for everything, but it will be good that you have an extra buffer of cash. Not only can things come up during the buying process, there is a good likelihood that things will occur after you purchase a house. I'm not saying that these items will be house related, but you need to ensure that you can pay for that car repair, plane ticket, or anything else that comes at you unexpectedly.

Buying a home will likely be your largest commitment in your life. With marriage's getting shorter, a 25-year mortgage is a hefty burden and it becomes a larger burden than most marriages, financially and in terms of length.