3 Steps to Help You Prepare to Buy Your First Home
First-time home buyers experience a wide range of emotions, often oscillating between exhilaration and all-out panic. All this is normal. In order to make sure that you have an easier time purchasing your first home,
First-time home buyers experience a wide range of emotions, often oscillating between exhilaration and all-out panic. All this is normal. In order to make sure that you have an easier time purchasing your first home, you need to do certain things as follows:
1. Figure out the size of your house – To begin with, you want to make sure that you are purchasing the home at the right time. Basically, if you will not be living in it for the next 5 years on the lower end, then it does not make financial sense for you to purchase one. Additionally, make sure that owning this particular home will not be a stretch for you. It should be a home that you are able to afford comfortably if your financial situation doesn’t change. A good rule of thumb is to keep your housing payment under 30% of your gross income every month.
2. Get your finances ready – You need to look at your finances and figure out the kind of home that you can qualify for. In order to make the purchase, your credit should be good, your income should be verifiable and you should have the cash needed to close the sale. Doing the following things is important in this regard:
- Review your credit report and fix any errors that may be in it. Also, work on improving your score even if it is just by a few points. You can do this by paying your credit cards down. Be sure not to take on additional debt in the form of a car loan or another credit card. Understand that this process can take time, so start at least 6 months, or more, in advance.
- Begin saving money that will go into the down payment and closing costs. A good amount to work with is 20% of the mortgage amount. Costs will include such things as stamp duty, valuation fees, conveyancing fees, loan or mortgage application fees, insurance, building inspection and the like. Do your research so as to work with realistic figures while saving for your first house.
- Ensure that all your documents are in order. The documents will include tax returns, bank statements, pay slips, and the like.
3. Shop around for a mortgage. –Don’t relegate this to the bottom of your to-do list. Instead, begin searching early and talking to different lenders. Most of them offer mortgage pre-approval at no cost and the process is non-binding. If you have neither the time nor the inclination to move from one lender to the next, it may be in your best interest to speak to a mortgage lender such as The Savings Centre. A mortgage lender will be able to offer guidance on available loans that you qualify for, help you out with filling paperwork and give you a pretty good idea on how much money you will need upfront in order to close the deal when you finally find one you are happy with.
Purchasing your first home requires much thought and the process starts well before you sign on the dotted line. Begin working on the process now and things will be much easier when you are ready to purchase.
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