One of the biggest purchases in life is a home. There’s a lot of satisfaction that comes with knowing that you’ve a house you can call your home. Recently, the real-estate market has appeared cooling but the fact remains that home ownership is still at the core of the American dream. It’s also a great way of building wealth over time if done properly.
Following are things you need to know when buying your first home
Get ready for a mortgage
Mortgage is the easiest way for many who want to own homes. The economy has been under recession in most parts of the world and therefore majority cannot afford to buy a house in cash- you’ve to borrow. Depending on your level of income, your assets and debts, you need to find out how much you can afford to pay for a mortgage. Once you’ve established that, you can go ahead and look for a home that you prefer. The next thing you need to check is your credit score; if your score is low, then that means you’ll pay a higher interest and therefore dramatically changing the cost of buying that home. If for example your credit score is higher than 730, you should get into a conversation with your preferred lender. For a better deal, you should shop around and get a few that you can compare. Even the slightest difference in APR could mean a saving in thousands of dollars.
Pay off all debt and establish an emergency fund
Owning a home is not a cheap affair- it’s more expensive than just renting. It could be that your monthly payment is less than the rent you’re paying but there are other costs like maintenance and upkeep. Thus, if you’re thinking of owning a home, clear all debt and set up an emergency fund of at least six months of expenses.
When you’ve an emergency fund, you’re cushioned of any costs that may arise and therefore you dont have to be worried about them,
What type of a house can you afford?
When it comes to buying a home, you need to think of how much you can afford to pay compared to your preference. You may have fallen in love with a particular home but if you can’t afford or if you’ll strain to pay, then you’d rather not go for that. When drawing your budget, you need to leave room for other housing costs like HOA fees, insurance, taxes and these should not be more than 25% of your take home income or pay.
Save a down payment
If you can’t save enough money to pay for your house- something that most people cannot afford- then at least you should save a down payment of 20%. There are first time home buyer programs that will offer single digit down payment but you should not buy such. The option will cost you far much more in the long run. Plan in advance; see how much of your disposable income you can save monthly and do this for five years or so. That will give you some good deposit that will reduce your monthly installment and the total cost of the home.
When buying a new home, you must consider how much you can afford. Once you get everything ready, move in to your new home quickly. Get a reliable professional mover like Meyer Moving & Storage to help settle as fast as you can. That will help you avoid paying rent while still paying your monthly installments.
