Entrepreneurs who operate from their home can find themselves quickly outgrowing the confines of their home office. While this is great news for your business, it may be a reason to buy a new home. Moving to a larger home may accommodate both business expansion and the needs of your family. While you may be looking at existing homes, another option is to buy a new home or custom home. It’s another great option and will ensure everything is warrantied. Delonix Homes is an exceptional home builder in Chilliwack. They focus on customizing options to fit both your family and business needs. If you find yourself weighing the reasons to buy a new home, here are some things to consider.
Assess Your Finances
As an entrepreneur, you likely manage your finances and your income a little differently than you do your personal finances. Working as an independent contractor or sole proprietor may be one of the reasons to buy a new home. However, it may be a challenge when it comes time to finance a major purchase like a house. Your mortgage lender may require profit-and-loss statements and several years’ worth of business and personal tax returns. You may also be asked to provide proof of income via bank statements or other transactional documents. Lenders will want to see you have the financial resources to pay a mortgage in a timely fashion. Your credit history will also factor into what kind of financing you qualify for. Canada Mortgage has a quick checklist of necessary documents you’ll need to have on hand when you apply for funding.
Consider a Co-Signer
Many self-employed individuals find it’s easier to qualify for a mortgage when they apply with a co-applicant, like a spouse or family member, who works a regular salaried position and can easily verify their income. This can be especially beneficial if, you maximize deductions related to your business operations. Obtaining financing on your own may difficult if you’ve been in business for a short period of time. Similarly a co-signer may help if your business doesn’t have a significant or steady revenue stream. Carrying a significant amount of debt as a business owner, can also impact how you’re viewed from a financial perspective. Also, it’s wise to check your credit and your debt-to-income ratio before moving forward in the home search process.
Choosing a Mortgage
You have a number of options for mortgages, all of which have different terms and conditions. A conventional loan requires a 5–20% down payment. Putting down at least 20% allows you to forego mortgage insurance. Variable or hybrid loan have fluctuating interest rate. Portable and assumable mortgages may allow you to transfer or take-over existing mortgages. Alternately with an open mortgage, you can make additional payments to pay down the balance faster. However, an open mortgage typically carries a higher interest rate. A closed mortgage restricts extra payments, but interest rates are generally lower. Also, consider the best amortization period or the time it takes to pay back the debt. Longer periods mean smaller payments, but you’ll be paying more interest in the process. It’s important to remember you may have to renegotiate the terms of your mortgage when the agreement ends.
Buying As-Is
Buying a house “as-is” means you are accepting it in its existing condition, as-is, where-is. You’re not requiring the owner to make any changes or repairs as part of the sales process. This can be a good way to save money and get a deal on a fixer-upper home. However, you will want to get a full inspection to ensure there are no major structural problems. These could be costly expenses down the road. On this topic, consider retaining an attorney and consulting a general contractor. Likewise conducting a title search to ensure there are no red flags is something a lawyer will help with. Also, consider the time and money you will need to get the home into a good living condition. Ensure you weigh that against the cost-savings you’ll realize with this type of purchase.
The reasons to buy a new home may not check all your boxes. In this case you should consider the pros and cons associated with buying existing vs. building new. The article HERE may help with that topic.
There are countless reasons to buy a new home. Whether you’re building a new custom home or looking at a major home renovation, Delonix Homes can help achieve your vision, to meet the needs of an expanding home-based business, . Call (604) 703-3534 for more information.