Buying a new house can be a tricky one, especially as a first time home buyer. Before approaching the bank or lenders for mortgage loans, you need to have some financial strategies in place. Homeownership usually goes hand to hand with obtaining a mortgage to secure your purchase, therefore our first advice to all first time home buyers has always been the same – get a mortgage pre-approval first.
You can get an idea on how much your monthly payments would be by either going to a financial institution such as a brand name bank, or you can use a Mortgage Rate Calculators to figure out the payments & best interest rate you are likely to pay after your purchase. These Online Financial Tools are usually free of charge and give you easiness of finding information in the comfort of your home.
If you are planning on buying a house, consider the following financial strategies:
1. Start Saving Ahead of Time
Don’t be caught off guard. Investing in the real estate, especially buying your first house, shouldn’t be an impromptu decision to make overnight. Open an exclusive savings account specifically tailored towards buying your home. No matter how little the fund is, always transfer money into the account.
2. Have at least 20% Down Payment Available
Set aside a down payment of at least 20 percent before buying your dream house. Firstly, you can potentially get a lower interest rate and also, you will be shielded from Private Mortgage Insurance. Some lenders introduce the PMI to protect themselves from loan defaulters.
3. Have an Emergency Fund
Buying a house usually comes with extra unplanned expenses. The truth is, the moment you transcend from a renter to a homeowner, your budget and expenses and other miscellaneous bills automatically increase. To avoid being caught unaware by some surprising expenses, ensure that you have an emergency fund that you can resort to in times of a need. These funds will keep you running for the meantime, even if your source of income takes a sudden hit.
4. Evaluate the On-going Maintenance Cost
Ask yourself, what will be the cost of maintaining your house on a monthly or yearly basis? It will be foolish financial planning if the cost of maintaining your home exceeds 1% of the total cost of the house. However, it is just a rough estimate for you to be prepared to anticipate some costs, and this does not mean that you will keep spending that amount on your house maintenance.
5. Use Mortgage Calculators
Mortgage calculator tools allow you to calculate the total amount you will pay for your mortgage over a given period of time. With this tool, you can plan and set aside funds towards buying your first house. With this, you have peace of mind with minimal pressure since all expenses have been put into consideration beforehand.
6. Put the Furnishing Costs into Consideration
Every other loophole and costs towards getting your dream house have been now taken care of, but then you need to consider one more thing – the cost of furnishing of your new place. No doubt, you may have some furniture you are bringing along from your existing rental, but then, you will still need to spend some money to furnish your new house to your taste. Ensure you visit two or more home furniture stores to evaluate the cost of moving into a new home.
Buying a new house is usually a very stressful process that requires a lot of research and knowledge of strategic financial planning. With all the tips described above, you are now prepared to get through the purchase process with less hassle and become a happy new Home Owner.