Although mortgage debt is good debt, buying your first home is a huge financial decision and there is a lot to think about. In fact, it is one of the most important financial decisions you will make in their lifetime, but there is no need to shy away from home ownership. Here are five first time home buying tips to help you get off on the right foot in your home buying journey.
Although mortgage debt is good debt, buying your first home is a huge financial
decision and there is a lot to think about. In fact, it is one of the most important financial decisions you will make in their lifetime, but there is no need to shy away from home ownership. Here are five first time home buying tips to help you get off on the right foot in your home buying journey.
Determine what you can afford
Before you start shopping for a home – and definitely before you consider putting an offer on one – come up with a realistic budget. Remember, home ownership involves costs beyond the monthly mortgage payment, you will also have utility bills, insurance, taxes, and home upkeep. Consider opportunities that will help you manage your housing costs. Could you rent out part of your home, or have a roommate to help with your expenses? If you purchase a condo, could you rent out an extra parking space if you have one?
Start off small
Your dream house may be priced too high, so a starter home might be the right option to ease you into home ownership. A smaller home or maybe a house just outside of the expensive area will help get a foot in the door. You can take advantage of low interest rates now to pay off your home quicker and use the equity you will gain from your first home
to buy that dream home later.
Get expert advice
Work with a mortgage broker to sort through all of the mortgage options and get the right
combination of mortgage features, privileges and rate that is best matched to your needs. The right mortgage goes beyond just the rate; it’s important to also consider term, prepayment options, refinancing penalties, restrictions, and fees. As a first-time home buyer, or even later in your home ownership experience, you cannot possibly know the
ins and outs of such an intricate industry, so let an expert be your guide.
A mortgage broker will help you build a strong team to get you the best mortgage and ensure all aspects of buying a house are efficient and professional. Your team will include a realtor, lawyer, and a home inspector.
Plan for closing costs
There are additional costs that come with buying a home – lawyer fees, reimbursements, land transfer or similar tax, appraisal, home inspection, title insurance – so you’ll need to have some extra funds set aside to cover these costs. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs.
Accelerate your payments – early and often
A mortgage is the largest debt you will probably ever take on, and paying it down faster can mean large savings on interest costs over the long-term. Get in the habit of making lump sum payments whenever possible and consider making bi-weekly payments as a way to decrease the life of the loan. Your mortgage broker will provide strategies to help
you pay your mortgage off faster and save thousands in interest costs.
There’s so much to consider. Work with a professional broker will help you get into the market and start your wealth building with smart debt – not to mention get you into your very first home!
