Purchasing one’s own house would be probably the most expensive purchase of many people’s lives. This is a life-changing decision and would often be full of emotion and stress especially if not handled or planned for correctly. There are so many things which you need to take into account when making this life decision such as the proximity to your work, to your children’s school, the safety and security of the location, and how near the house would be to the city.There is also a significant financial aspect of this purchase, with factors to consider including how much of your salary would go to paying off your mortgage, what budget range to consider for the house itself, and for how long you would be willing to pay for your house. There are just so many things to wrap your head around, and without the proper guidance, this could indeed be overwhelming for many people. To help you get started on this though, here are a few tips for first time home buyers to get you on the right track towards owning your dream house.
When shopping for your first home, you need to be very sure that you can afford what you are buying. This ensures that even with a good credit score and an attractive mortgage plan, you would have that peace in mind knowing that your finances can accommodate this tremendous new burden imposed on it. If you buy a house that’s too expensive but made available to you through staggered payments and mortgage wizardry, time will come wherein trying to catch up with payments will cause you undue stress and pain – which are things no one wants!
To avoid this, it would be recommended that the total monthly housing costs, including all the associated expenses including maintenance, association fees, taxes, and insurance should be no more than 25% of your monthly take home pay. This budget limit would ensure that your finances remain flexible in both good times and during times of struggle. It would also give you space to pursue other investments without worrying too much about your mortgage payments.
When you have your budget set, and your eye on the home you want, the next step would be to get pre-approved for your loan. Don’t hesitate to try different banks and lenders! Comparing mortgage rates and premiums is very important to find the best deal for you. Not all banks and lenders will give you the same rate, and often, there would be “teaser” rates which would be very low at the start, only to rocket up after a few years. Stay away from these, and instead, get something which would be more gradual and stable as your mortgage matures in time. At a minimum, try to speak with at least 2 to 3 different lenders in order to get a feel of the packages each one presents for the house you want to purchase.
Get Professional Assistance
Since this will be one of the most important (and expensive) purchases of your life, you wouldn’t want to mess it up right? Seeking professional assistance from experienced and reputable real estate agents would be one of the best investments you can use your money on prior to buying the house itself. Make sure your real estate agent represents your best interests at all times, helping you make informed decisions, and be able to refer you to other professionals such as home inspectors, title companies, and contractors. All these small things make whatever you would pay your real estate agent very much worth it, and should be able to lessen the burden of finally buying your dream house.