Are You a First Time Buyer? Important Questions to Answer Before Taking the Plunge and Buying Your First Home

Are you planning to buy your first home this year? Maybe you have been working towards this goal for a long time? There is nothing like the excitement of finally being able to buy your own house, getting the keys and making it your own.

Choosing the house and buying it is a major decision because the house will become one of your main financial assets. Plus, you’ll be making mortgage payments for a long time to come. You want to make the right choice on the house to buy and have your finances in order. To help you make the right decision, carefully consider each question below before you buy.

Are you financially stable?

Have you had your job for at least five years? Do you have a reliable income?

Can you commit to making monthly mortgage payments for at least ten years?

Are there any other major expenses coming up that would make keeping up with your mortgage payments difficult?

Are you planning to stay in this house for at least five years?

The first five years of mortgage payments usually only cover fees and interest. Are you ready to settle down in one spot?

Can you raise your credit score?

You can qualify for a mortgage with a credit score of 580, but you’ll have to spend more on fees, interest, and your down payment. You’ll get a much better deal if you wait until you have a credit score of 700 or above.

Can you afford a home of your own?

Look at how much money you have left every month after any debts have been paid.

This is your debt to income ratio. This is a good way to tell if you’re earning enough to afford a home. Ideally, the expenses linked to buying a home shouldn’t exceed a third of your income. Add up your mortgage payments, utilities, property taxes, and expected repairs.

Can you save money for your deposit?

Depending upon your mortgage provider, you can buy a home with a deposit of anywhere between 3% and 20% of the value of the home. The more you can afford to pay, the lower your mortgage payment will be.

Can you put aside 3% of the value of your home every year for its upkeep?

Don’t forget to plan for the expenses of maintaining your home. You should count on spending at least 3% of the value of the home on maintenance each year. Create a saving fund to cover these costs.

Can you document your current income and assets?

Start gathering all the documents you’re going to need while you compare mortgage options.

Finally, do you have time to look for the right house for you?

Go and see the houses in person.  It’s best to wait until you can afford something better if you don’t find anything you like. Take the neighbourhood and its development into consideration when buying a house, since these aspects will influence the future value of the house.

Buying a house is an important decision. Becoming a homeowner means that you’re taking a big step on the path of financial stability, and you need to be prepared for this step. Your home will likely become your main asset as it appreciates in value and you build up further equity in it by paying down your mortgage.

Buying a home requires careful planning. Ask yourself how much you can afford to borrow, what kind of mortgage would be best, and what kind of home would be adapted to the unique needs of your family. Take the time to go over your income, boost your credit score, and make a list of what to look for in your ideal home before you start your search

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