HOW TO BUY YOUR FIRST HOME?

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Buying a home is a dream of many. But when it comes to execute it, dreams get broken if you don’t plan for it. You should start saving as early as possible. Because the longer you will save for your dream house, the less you have to save each month. For example- you are saving $1,000/month to buy a house after 5 years. If you instead decided to start saving 5 years ago to buy a house, you’d only need to save $500/month for your down payment. If you are really conscious about buying your own house, you should save a fixed amount each month that is 5 to 10 percent of your monthly income. You can also use some of your investment money to pay for these savings goal. It’s not ideal, but you can do it.

You should try to save atleast 20 percent down so that your monthly payment don’t cross 30 percent of your gross income. If you can’t do it, I urge you to wait until you save more. You can stretch a little but don’t stretch too much that it goes beyond what you can actually pay. Better you should plan as early as you can. If you make a poor financial decision, you’ll end up struggling. It can become a bigger problem throughout the life of your loan. Don’t let this happen, because it can ruin all the hard work you put into the other areas of your financial life.
Therefore it is very important to make a good decision when buying your house. You will know how much you are spending each month on your house. Your expenses will be under control and you will have money to spend on whatever else you want to do.

Here are some tips you should follow for buying your new house-

  1. Increase credit card score: You get better rate on your mortgage when your credit card score is higher. If your credit card score is low, it might be a better decision to delay until you can improve your score. Good credit translates into not only a lower total cost, but also a lower mothly payments.
  2. Save as much as possible for a down payment: Traditionally you have to put 20 percent down. The more you put down, the less EMI you will have to pay. If you are not able to save atleast 10 percent to put down, you should delay buying your own house. Otherwise you will face trouble to afford an expensive mortgage payment, maintenance, taxes, insurance, furniture, renovation etc. As I have already mentioned, set a savings goal for the down and stick to it until you save a lot.
  3. Calculate the total amount of buying a new house: Most of the people calculate only the price of the house. But this is not sufficient. Because after buying, there are still multiple factors like insurance, taxes, maintenance, and renovations etc. to invest your money. If you don’t calculate all these, there is strong possibility you are going to fall into debt. Therefore research all this stuff before buying a house.
  4. Check for the perks: Sometimes the goverment launches some schemes to make it easy for first-time buyers to purchase a house. Also don’t forget to check with any associations you belong to, including local credit unions, teacher’s associations etc. You may get access to special mortgage rates.
  5. Use online services to compare properties in neighbourhood: You can use various online application and websites to compare different properties so that you can negotiate with the sellers and get a better property in better price.
  6. Decide how much you can afford: I know most of you want your first house to look like a castle. But your budget should also match your dream. Make your budget according to your convenience. After all you have to pay the EMIs. Don’t spend too much which can lead you to fall into debt.

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1 Comment

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