The process of buying your first home seems like a straightforward journey- look at the available listings, tour one or two homes, apply for a mortgage, get the mortgage, sign on the papers, and Voila… you are a homeowner- finally! Then you start making payments to service your mortgage, probably for the next 15 or 30 years and that is it! But, is it that easy though? Well it is not, buying your first home will be daunting and you can expect a few hiccups along the way. First of all, buying your first home will be expensive and it doesn’t matter whether you are a first-time homebuyer or buying a second home, there are plenty of things you need to be familiar with.
Buying a home isn’t just signing papers, there are so many things that go into the process. And even though you may have already bought a home before, there are very useful and insightful tips in this article that you may find very surprising.
Homeownership is one of the exciting experiences you will have in your lifetime. This is the place where you want to build your life. it is the place you want to raise your family, which makes the homeownership journey an extremely emotional one. However, even though you might be excited to be a homeowner, that excitement may quickly turn into frustration, if you go into the process of buying your first home without first understanding the dynamics of the property market. Do not learn the hard way!
Is Buying Your First Home Really Worth It?
Homeownership is a smart investment. Many first-time homebuyers always ask this question, comparing homeownership to renting. Of course, if you consider so many factors, in the short term, renting seems like a good option.
Consider this; you are currently renting your apartment for $1,000 per month. This monthly rent also covers all the utilities and everything else is provided, fridge, oven dishwasher, and many other appliances and utilities. In this case, you know that your monthly costs are exactly $1,000 per month.
Assuming you get tired of this lifestyle because you want to own a home and after several weeks or months of house hunting, you find your dream home which the mortgage servicers say you can afford since the monthly payments will be just $1,200 a month. Looking at the numbers, you can pull it off, right?
What you do not know is that there are a lot of other additional expenses you have forgotten about, unlike renting, these expenses will fluctuate on a monthly basis forcing you to dig deeper into your pockets. Don’t forget about the taxes too, and the insurance, and the home association fees… I could go on. If you are not prepared, these additional expenses will break you! When you consider all these factors, you have to ask whether buying your first home is really worth it.
To many people, this shouldn’t even be a debate or a question, after all owning a home will always be worth the cost, but you have to do it when you are ready. A home isn’t worth your health and peace of mind. If you cannot afford to make the mortgage payments plus all other utilities, then it totally not worth it! But, if you think you can make it, get out of the comfort zone and start working towards owning your home, if you are comfortable with it, get a second job because homeownership is not for the faint-hearted.
Can you Really Afford it?
We have touched a little on this and I feel it should go deeper because most people go wrong on this. If you want to get into financial turmoil very fast trying to live a glorious life just to impress others. There is no point in buying a home that you cannot afford. Get a mortgage that you are comfortable with and getting a mortgage rate that will make your monthly payments less harsh which will leave you extra cash in hand to finance other activities.
In order for you to get a good mortgage, you will need to have a high credit score which takes discipline to achieve.
Before you shop for a home, it is important to first do your research. Try to set aside the monthly expenses for the home that you want to buy and remember, exclude the mortgage payment. Find the subtotal of the expenses you’ll be expected to pay for and then add the mortgage payments. If the totals make sense to you, then go ahead and make your purchase.
In most cases, first-time homebuyers think they can just take experts’ recommendations to just spend 28-30 percent of their incomes on housing and then estimate their monthly mortgage payments and think that they can make the payments. They then estimate their monthly payments, compare them with the estimated payments but what they do not realize, there are a lot of factors that haven’t been factored in. most of the online calculators assume a 20 percent down payment which most first time home buyers do not have, and also set an interest rate that you may not get.
The affordability of a home will depend on a host of many factors that interplay to determine whether you can afford the home. For instance, people with low credit scores will find it very hard to afford an average home, especially when the economy is in recession.
To help you figure out what you can actually afford, there are numerous online mortgage calculators that will help you figure out just how much home you can afford but use these online resources really carefully.
Bottomline
If you are looking to buying your first home, buy a home that you can afford and make sure that you understand that there are a lot of expenses that come with buying a home. It will not be easy but once you tuned your mind to these two facts, everything will work out just fine.
