Becoming a homeowner for the first time ever can be one of the most exciting events of your life. On the other hand, as exciting as it can be, it can also be an overwhelming and confusing task. There are a lot of things to consider, and a lot of deals that may look good at first, but would eventually lead you into what’s known as a “debt trap”.
This is the reason you need to be aware of the things that surround the entire process of acquiring your first home. From the variety of home types and prices to making the best pick from any number of lenders offering different mortgage rates in Florida, here are the top five tips for first time home buyers.
Pay down your debt
Owning a home is one of the most expensive decisions you’ll ever make. The cost of owning a home does not end with you signing the deal and finalizing the purchase. You may want to make some home improvements. Down the line, you’ll need to do repairs and maintenance. If you plan to buy a property and keep it in good shape, be prepared to spend a decent amount of money in the long run.
This is why it is a good idea to make sure that you are debt-free before deciding to buy your first home, or at least you are in a situation where it would be manageable for you to add a mortgage to your current financial responsibilities. On top of this, it would also be a good idea for you to have an emergency fund ready.
Know how much you can afford
As with all things, only borrow what you can afford to pay. Before you get yourself emotionally invested in the house that you want to buy, make sure that you have enough space in your budget to pay for it on a monthly basis.
Would you be able to pay the mortgage monthly and still have enough money for all of your other expenses? If you think you’d need to sacrifice something out of your basic expenses, then you need to reconsider the mortgage you’d like to get. It may be too expensive for you, or you might need to increase your income flow to afford the house that you want.
Save for a good down payment
Having a higher down payment will serve you well in the long run. In general, the larger your down payment, the lower your monthly mortgage payment will be, and the lower your interest rate will be, too.
So don’t be blinded by low down payment offers that you see–these are traps, most of the time. Rather, save for a down payment of at least 20% (or more, if you can), and enjoy lower overall rates for your home mortgage.
Save for closing costs, too
Aside from a good down payment, set money aside for closing costs, too. This means all the extra costs that you need to pay when finalizing the purchase of a home. This includes insurance, attorney fees, credit report fees, inspection fees, and the like.
Getting preapproved is not simply knowing if you are eligible for a loan or not. It can bring several benefits, too. If you can get preapproved ahead of the actual loan, you have the confidence that lenders believe you are capable of handling the loan that you are planning to get, at least within the basic loan requirements the lenders have set.