Buying your first home is perhaps one of the biggest financial decisions you will ever make. Whether you are planning to buy a house to build your family or buying a house as your first long-term investment, the process will be exhausting and tedious. Nonetheless, it is a process every first-time homebuyer goes through. From scouting a nice and secure neighborhood to securing financing for your dream house—not to mention tons of paperwork you need to prepare—it will all be worth the time and stress once you finally get the keys to your first-ever home.
Ready to buy your new home? Here’s a rundown of things worth considering before you make one of the most significant purchases of your life:
What’s your lifestyle?
You might be wondering, what does your lifestyle have to do with picking a home? Most of the time, your lifestyle will dictate your needs. If you are in your 20s, your lifestyle will be much different from someone else in their 30s looking to buy a house. Are you single, career-driven, and always on the go? Or are you getting married soon and looking for a house to settle in?
If you fall under the first one, you might be considering buying a condominium unit because it is easy to maintain and may be accessible to your work. A studio or one-bedroom unit will be perfect, especially if you dedicate most of your time working in the office. A one-bedroom condo unit will not be the best fit, though, if you are buying a home to start a family. You might want to consider a two-bedroom apartment or some house with a nice yard for the happy home you are about to build.
Choosing a location
Do you love the hustle and bustle of the city? Or do you want a quieter neighborhood where you can relax on your free day? The location of the house that you will purchase affects the overall price. Houses in the city will surely cost you more. Although one advantage is that you can go to many establishments at any time of the day and you’ll spend less travel time.
This can be helpful if you live in a really busy area where traffic congestion is a daily plight. If travel and accessibility are not an issue, choosing a house on the outskirts of the city or nearby towns will significantly reduce the purchase cost. Whichever you choose, there are many real estate developers that can help you pick the perfect location for your home.
Financing your home
As we have mentioned, buying a house is one of the biggest financial decisions you will make. And it does not end once you get the keys to your dream house. If you are getting a house, chances are that you are going to get a mortgage to purchase it. While this might seem the most overwhelming and decisive part of the process—which might even dissuade you from buying a house—don’t stress yourself out.
First, you need to know how much you can afford. How much do you make monthly or annually? Do you have other liabilities? Knowing your financial capacity will help you determine the type of property that would fit your lifestyle without breaking the bank. This process can be frightening. But don’t worry; there are many lending institutions such as banks and other financial institutions that may help you fund your dream house into reality. These institutions will help determine the best type of mortgage for you, depending on your financial capacity.
While there are many lenders that offer house loans, also keep in mind that your credit score affects your chances of getting approved. Nonetheless, there are also mortgage companies that may still help you finance a house loan even with an unsatisfactory credit report.
Budgeting and Saving
Even after getting your mortgage approved, you still need to budget for your monthly payments. According to the Federated Lending Corporation, allocating 28% of your monthly income for mortgage is recommended. This could still vary depending on your other liabilities and expenses. On the other hand, 20% is the general rule of thumb for allocating a portion of your income for savings.
Take note that a mortgage is part of your credit report, too, and like other loans, missing a payment will hurt your overall credit score. In some instances, your property may even be repossessed. If you can afford to pay off your mortgage early, it will help you budget money that you can use for other long-term investments.
Buying a home can be scary, but it is a necessary step in securing your and your family’s future. While the initial process may discourage you, having a space you can call your own home is an achievement. Just remember that being a homeowner entails responsibilities both financially and mentally and that if done well, this experience can be very rewarding.
