What makes homeownership a big deal? It’s seen as a sign of adulthood or maturity and financial responsibility and stability. These are some of the reasons why most people, especially the first-time buyers, rush into buying a home.
But we must not forget that the process of homebuying is a truckload of work. It is a big commitment but most of the times, homebuying does not become an investment but a big liability. Here are a few things to remember to have a smooth-sailing experience when buying your dream home for the first time:
1. Choose the right type of house and neighborhood.
There are different types of home to choose from. Weigh the pros and cons of each, based on your lifestyle and budget. A condominium or townhome may be more affordable than a single-family home, but it will mean less privacy. Don’t forget about homeowners association fees, too.
Check out potential neighborhoods. Choose one with amenities that are important to you and research for other factors such as the safety of the area and the day-to-day traffic situation.
2. Buy a home when you’re financially ready.
When really is the right time to buy? According to an article from BBC, first-time buyers wait until they are older to buy. Maybe because as you get older, you are getting more stable with your finances and you are getting better at making major decisions.
Remember too, that you don’t buy a home just because everybody’s doing it or just because of low mortgage rates. You’re reason should be simple : you want to be a homeowner, you’re settling down, and need a place to live for at least five years or more.
3. Start saving early
When you have chosen the type of house and the neighborhood that suits your needs, you now have to start saving for your dream home. Down payment is only one of the main costs to consider when saving for a home. If you want to know the other factors, use this online Mortgage Amortization Calculator.
This calculator estimates the loan payment for a mortgage inclusive of property taxes, homeowners insurance, PMI & HOA fees.
How helpful is this? Here, you can set the purchase price of the property you need, then you choose how much down payment you can afford. It is advised that you pay at least 20 percent to avoid additional tax then you’ll get your Mortgage Loan Amount.
On the second part, you have to choose the mortgage term in years, if you want smaller monthly amortization, you may choose 30 years, but it is not always the best choice as it may mean more interest over time then you set the current interest rate in your area. You can search for this info at the RATES tab. You may leave the value of the PMI as is but actually, it is no longer needed if you are paying a down payment of 20 percent or more.
The last part is about the expenses that come along with owning a home such as annual property taxes, annual insurance and monthly HOA fees, which you can ask from your agent.
This calculator automatically computes every input and it gives you the actual scenarios as it is using real market data to obtain a favorable rate on your mortgage.
From the result, you can now have an idea of how much you have to save, so you won’t have to experience a financial mess like what most first-time home buyers do.