While purchasing your first home is a major decision, there are many smaller things to consider along the road. To assist you in navigating the procedure, we’ve collected a list of tips for avoiding some of the most common mistakes.
- Determine how much money you’ll need during the closing. You’ll need money for a down payment (see how much you should put down) and closing expenses when you buy a house (estimate your closing costs). The down payment ranges from 5% to 20% or more of the purchase price. If you put less than 20% down, you’ll almost certainly have to pay for private mortgage insurance (keep reading for more on that). Closing costs, which include charges such as loan origination fees, might be around 3-7 percent of the overall loan amount.
- Make a provision for private mortgage insurance in your budget. If you don’t put down at least a 20% down payment on a property with conventional financing, PMI is usually required. Make sure you understand how much this will cost and account for it in your monthly mortgage payment budget.
- Do some homework on your utilities. Ask your real estate expert about the home’s energy expenses if you’re moving into a larger home than you’re used to, one that’s newer or older than you’re used to, or one that’s located in a climate that’s hotter or colder than you’re used to. This can assist you to avoid being shocked by a higher-than-expected electricity bill. Find out about water bills if you’re moving to a new neighbourhood.
- Don’t forget about other expenses. Make sure to include in moving charges as well as additional upkeep costs. Newer homes require less maintenance than older homes, however, all homes must be maintained. Remember to factor HOA dues into your budget if you’re thinking about buying a condo or a property with a homeowners association (HOA). Keep in mind that you should have an emergency fund set up to cover any unexpected changes in your income (such as a wage drop) or unanticipated expenses (like medical bills).
- After you’ve purchased your property, properly manage your debt. Your home may require new appliances, landscaping, or even a new roof at times. One of the most common causes of missed mortgage payments is carrying too much debt. By properly planning for these expenses, you can prevent one of the most common causes of missed mortgage payments: carrying too much debt. It’s critical not to overextend your credit card and other loans in order to keep your payments current.
- Before you start looking for a home, get prequalified for a mortgage. Knowing how much you can borrow will help you narrow down your search to properties that are a good fit for you. Before you start looking at houses, get prequalified. This will give you an idea of how much you can borrow.