Buying a House for the First Time
Buying a house happens to be a big decision. A lot of things need to be taken into consideration before hitting the market in order to buy a house. Buying a house isn’t just a financial decision. It’s an emotional decision as well. The house you live in is bound to occupy a special place in your heart. You don’t buy a house just because it’s cheap, do you. A house is a long-term investment. You buy a house keeping your future generations in mind.
First-time buyers find it hard to select a house. It happens to be an unexplored ground for them. Also, it goes without saying that a house cannot be bought overnight. As a first-time buyer, there’s a lot that needs to be ascertained. The process can appear a bit overwhelming at first. However, you can make life easier for yourself by taking into consideration the following tips:
1.How much is the budget?
That’s the most important question. You won’t be able to buy more than what you can afford. Get your finances in place. Keep an eye on the budget. It will determine the size, shape, hue and colour of your house. It is advisable to arrange the finances beforehand. In this way, you’ll already be knowing your strengths and limitations. Experienced house buyers are well aware of the advantages of having a budget in place beforehand. It doesn’t let you nurture unreal dreams. Those planning to live in Canada can have a look at Burlington real estate .
2. Pay Off all your debts
It certainly would be no hyperbole that buying a house is an expensive exercise. Also, as a buyer, you are most likely to buy a house on installments. It is advisable to pay off your existing debts before buying a house on loan. Mortgaging is another way of accumulating funds. Try selling-off the assets that you no longer use. The more you save, the lesser your loan amount would be. Make it a point to settle all of your dues before you hit the market to buy your dream home.
3. Don’t go for something that cannot be afforded
This part is really important. Having dreams is important,but having unreal expectations is bound to backfire. Start with buying a small house if your budget doesn’t allow you to go after a big one. Don’t buy a big house just because others are buying it. You don’t want to spend the next 25 years in repaying the house loan.
4. Save a down payment
If you’re finding it hard to get the finances ready, then just try to save for a down payment of at least 20%.In this way, you won’t have to bear the costs for private mortgage insurance (PMI). It would help protect the mortgage company if you’re unable to make payments (foreclosure). Usually, PMI costs around 1% of the loan value.
With the option of down payment programs, first-time home buyers can fulfill their dream of owning a home even if the 20% down payment seems out of reach.
There are those who’d find the 20% down payment mark out of reach. In such cases, you can opt for programs offering single-digit down payment options. First-time house buyers are likely to find this option quite tempting.
Some terms you need to keep in mind
Adjustable-Rate Mortgages (ARMs): Initially, ARMs sound great, because the initial interest rate happens to be low, but they allow lenders to hike the rates. This is done keeping in mind the risk of rising interest rates in the times to come.
FHA Loans: You can get your hands on an FHA mortgage with a down payment of as low as 3.5%, but you’d also have to bear a mortgage insurance premium for as long as the loan isn’t repaid.
So, here are a few tips and tricks that’ll help you while you’re planning to buy your first house. Happy house hunting, folks…
