Ten Guidelines for the First Time Home Buyers
Nothing beats the buying of your first home, right? But, we can all agree how demanding and nerve-wracking can be as well. So, if want to start the exciting journey into home ownership, you are in the right place. The following ten tips will definitely help you to get started.
1. Make a clear list
It is time to create your wish list. Before beginning to look at new houses or flats, it is crucial to know exactly what you want and need, and obviously how much you can afford to spend on your new home. So, it is advisable to make a list of which things it is acceptable for you to compromise on and the ones you must have in your home. This list will help you to narrow down the search only to the properties which truly fit your needs.
2. Know your exact home budget
Banks and the other lenders decide with formulas how much money you can borrow from them. But keep in mind that they may not take into consideration your best interests, so our advice is to not rely only on them. Make the math yourself to be sure how much you can afford.
Note: Factor in retirement savings, the everyday expenses, and child care. The bank may approve you a $500,000 mortgage but there is always a chance that you cannot afford them.
Maybe your dream is to buy a house with a big garden in a reputable neighbourhood, but don’t rush! You may only have to afford a condo. The best choice you can make is to not over-spend on your first home. It is better to have smaller payments at first and you can move out later once your financial situation is better.
3. Don’t buy with your heart
You must think realistically and logically because this is one of the biggest purchases of your life. Don’t let your emotions guide you since you may end up paying more than for your home than needed and you will never rescue the losses.
4. Calculate the moving costs
Don’t forget about these expenses since moving out can be very expensive, particularly if you decide to hire a moving company. Make your moving budget, and consider all hidden costs so you don’t have unexpected costs.
5. You can get 20% down payment
It is good the down payment to be no less than 5% of the value. However, for the first time home buyers, it is recommended to try putting down 20% of the price of your intended home so you can qualify for a regular mortgage.
Keep in mind that you may spend more money than your saved down payment for new furniture, repairs, moving, and closing expenses.
6. Keep in mind the closing costs
The closing costs range from 1.5% to 3.5% of the overall price of the home. Expect to pay for land transfer tax, appraisal fee, title insurance, legal fee, home inspection fee, interest adjustment, fire insurance and property transfer tax.
7. Get pre-authorized for the mortgage
Once you calculated how much you will need for a down payment, considering what you want to possess in the property, and planned for the closing costs, then you need to contact a mortgage broker or bank so you can get pre-authorized for the mortgage. It’s best to use CompareMyRates or a similar site to find the best mortgage rate for you. You can compare multiple mortgage offers at once.
With getting pre-authorized for the mortgage you can see the other people interested in the same home. The vendor will get the knowledge that you are a serious buyer so you can easily negotiate the buying of a home.
8. There are various payment options
You have the options to pay for the mortgage weekly, bi-weekly, and monthly. If you pay off sooner, you will save thousands of dollars in the interest costs. But if you go for a longer amortization period, it will free up cash and lower the regular payments. There are online mortgage calculators which can help you choose the ideal payment schedule for you. It is most important to understand the mortgages’ terms and see if you agree with them.
9. Equipping the new home
Obviously, you will need fundamental items as couch, dining room set, coffee table, computer desk, lamps, and dresser drawers. You can always buy these items second-hand and renew them according to your style and save thousands of dollars.
10. Stop looking when you find your perfect home
The same goes for choosing a car, wedding dress or a life partner – stop looking once you find what you were looking for in the first place. Apply this rule when you searching for a new home. Once you have the keys to the new house, focus on making your space what you’ve always dreamt of instead of looking for a better one.