Buying a home is a milestone in anyone’s life. It signifies that you have gone through the hardship of growing up, and you are ready invest money in a fixed asset. Many people add more milestones along the way, for instance when they move from their starter home to a big family house in the suburbs. Others have a substantial property portfolio already, and are looking to expand. The first group will find it quite hard to finance a new home. The second and third groups, on the other hand, will find it much easier to secure finance, because they already have fixed assets.
Since first time buyers have it the hardest, they need all the help they can get. Our guide to financing your home will help you to identify how to take the first steps.
Buying vs Renting
The first thing to know about buying a home, is that it demands a lot more attention and financial responsibility than renting. Renters usually only have to pay some utilities, such as electricity and gas. Homeowners are also responsible for water, sewerage, and trash collection. Additionally, homeowners have to take care of repairs and maintenance themselves.
Preparing to Buy:
Before you rush off to apply for a home loan, first have a look at your current finances. Since applying for a mortgage secures a big amount of credit over a very long period of time, you need to make sure your credit rating is good. Start being more responsible now by paying all your bills on time, and paying off most of your other debt. Credit card debt is the worst offender, so prioritize that over study and car loans.
With your finances sorted, you can approach a financial adviser to help you plan your purchase. They will help you figure out what you can afford, and the size of loan you should apply for. Knowing this will help you identify where you should purchase.
Finally, visit several loan providers. You need to find a mortgage with the best repayment rate, so this process may take a while. You could also hire a mortgage broker to take care of this on your behalf. Doing this could save you a lot of time and money.
Paying your mortgage
For the next two decades or so, your mortgage repayments will make out the biggest part of your monthly bills. It stands to reason that you should always pay this bill on time. It’s even better if you can pay more than the minimum monthly amount. This will help you to pay off your loan quicker, and it will save you money because of the interest on mortgage repayments.
Cost of Ownership
Paying your mortgage isn’t the only cost you will have to cover as a homeowner. As mentioned before, you are responsible for repairs, maintenance, and renovations. Your roof will need repairs sooner or later, and your oven may need to be replaced.
Even more importantly, you need to protect your home by buying insurance. This includes basic homeowner’s insurance for your home and contents, disaster insurance for floods, earthquakes, and hurricanes, and liability coverage in case someone is injured on your property and sues.
source: finance plaza