5 Financial Tips For First-Time Home Buyers
Even the experts can’t accurately predict when the real estate market will peak or bottom out. If you’re buying a home as a long-term investment then you should not worry about the short-term changes in the market. Instead, focus on picking a home that meets your family’s needs and ensure to review financial concerns prior to searching for your new home.
1. Check on Your Finances
What sort of debts do you currently have? Car payments, student loans or consumer debts (credit cards) should be reviewed. Look up Debt Service Ratio if you’re unable to pay off any debts prior to buying a house to understand the calculations that lenders use to determine your loan amount.
Build an Emergency Fund that will help in the future with any improvements, renovations or surprise costs of homeownership.
Avoid any huge purchases. If you amass too much debt or buy a lot of big-ticket items, you’re going to have a hard time getting a loan. This is important to remember between accepted offers and prior to your closing date.
2. Find Out How Much House You Can Afford
Most people just focus on their mortgage payment, but they also need to be aware of the other expenses such as property taxes, utilities, and homeowner association fees. New homeowners also need to be prepared to pay for repairs, maintenance, and potential property-tax increases.
3. Save for a Down Payment
Between 5% – 20% is recommended for First Time Home Buyers. See if you qualify for any incentives or contact me to help you find out what might be available for you.
4. Save for Closing Costs
Besides your down payment, you will need to cover other costs associated with closing. When you are making an offer, you will need to consider how much of a deposit, typically a certified bank draft should be included.
Other costs include, but are not limited to Lawyer, Land transfer tax, Home inspection, Moving costs, Insurance.
5. Get Preapproved for a Loan
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts.
Once you’ve looked at your finances, you will be in a good place to make informed decisions. This helps take the emotions out of the equation and will also benefit when negotiating an offer and keeping the budget in check.
Get as much information as possible as this will help you make a logical decision. Once you’re comfortable with the amount you can afford, it will take some of the stress out of the home buying process. Now you can move forward with the most exciting investment of homeownership without the rollercoaster of emotions.
Call me to discuss your new home purchase! I’ll help you get through the next steps with complex contracts and negotiations. Together, we can work towards getting the best value for your new home needs.