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5 Tips to Consider When Purchasing Your First Home

Buying your first home is one the biggest and most important purchases you’ll ever make. There are a lot of factors to consider apart from getting a fair price and making monthly mortgage payments. Buying the wrong house can be a financial nightmare. Here are some of the things to think about when looking to mortgage your first home.

1. Know What You Can Pay

Sit down and make a list of all your monthly expenses, such as utilities, groceries, car payments, insurance, and so on. Don’t forget leisure activities like dining out or vacation. Whatever is left of your income after all other expenses is what you can afford as a mortgage payment. Many experts suggest that 30% of your net income is a safe amount. If you’re wise, you’ll stay well under that because unexpected financial emergencies always arise. Most mortgage companies offer mortgage calculators like the ones at like Premium Mortgage Corp that can help you determine your monthly payment, whether you should buy points, 15 vs. 30 Year Mortgage, how much your mortgage could save you in income taxes, and comparing an adjustable to a fixed mortgage.

2. Weigh the Additional Expenses

Don’t forget to factor in the extra costs of home ownership. Maintenance can be expensive and you’ll have to get homeowner’s insurance and possibly flood insurance, depending on where you live. Some developments charge HOA fees. There’s also property taxes. Local government can seize your home if taxes aren’t paid by certain deadlines.

3. Have the Home Inspected

Just because a home looks spotless doesn’t mean it was well-maintained. It could have a leaky roof, structural problems, or termites crawling through the joists. The realtor or homeowner may not even be aware of such issues. Have the home examined by a qualified inspector to determine if there are problems. Consider the costs of repairs on top of the mortgage.

4. Pre-qualify for a mortgage

Instead of disappointment trying to qualify for your dream house, it’s better to get pre-qualified for a mortgage. Some mortgage companies will do this for free. That way you know exactly what your limit is and what range of home values to look for.

5. Tread Carefully

Note that even a pre-qualified loan isn’t a guarantee. If something happens to spoil your credit or reduce your income, you may find the qualified amount shrinking. You must also pay attention to the fine print in any offers you make or contracts you sign. In some cases, your cash deposit on a property may be forfeit if you do something to violate the agreement.

Purchasing your first home is exciting, but remember that it’s something you need to take very seriously. No matter how perfect a home seems to be, properly weighing the financial risks is essential.

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