Buying a home is no children’s play – it is a hugely important decision in your life. It’s a step you should never make without being fully informed and fully prepared for what is to come. Yes, home ownership can really seem like a pink paradise – but, same as everything else in life, it may come with its downfalls. Even more, it is something you should turn on all sides and consider very carefully before signing on the dotted line.
What are some of the most important things to consider before buying your first home? Read on and find out more.
Think it through
What are your reasons to want to buy a home? Is it a real need or desire to live in a home you actually own? Is it related to building equity and to making an investment? Or is it more of a “the grass is greener on the other side” kind of thing?
Take your time, sit down with yourself (or with the person you’re going to share the mortgage with) and analyze your reasons.
Consider the advantages of living in rent
Yes, do this one more time before deciding that you want to buy a home. Although it may seem that living in a rented apartment is way less advantageous than living in your own home, consider the benefits as well. For instance, when you live in rent and something around the house stops functioning, you don’t have to bother with it (financially or otherwise) – it will be your landlord’s job.
Furthermore, living in rent also means that you have a lot more freedom to move – you are not stuck to one place for the rest of your life because that’s where your mortgage money goes. So, if you plan on moving to another location in the next few years, renting may still be a lot better for you.
Do you have the down-payment?
Although there are mortgage companies who might approve a loan without down-payment, think of what an impact this will have on your monthly payments. It is far better to put down a 20% down-payment and borrow the remaining 80%, as this will have a considerable impact on the sum of money you have to pay each month.
How long will you pay for it?
Many mortgage companies will provide you with the option of taking a 30-year loan. However, think of what this means in terms of how much you will end up paying back. What’s more, think of where you will be in 30 years – will you make as much as you do today? Will you be able to save for your retirement? Will you be fully retired? We highly advise you to take a 15-year mortgage instead of a 30-year one – you will pay more every month, but you will end up paying far less in the long run.
If you have decided that you really want to buy a home, and if you have decided that you meet all the other criteria to do it, start shopping around. See what multiple banks and mortgage companies have to offer, closely analyze each type of loan and, of course, shop around for the perfect home too. Remember, you shouldn’t rush into this in any way – so take your time, ask your questions, put everything in balance and only decide on what truly fits you best!