3 Mortgage Tips for 1st time Homeowners
3 Mortgage Tips for 1st time Homeowners
Being a first-time home buyer is thrilling, and the desire to purchase a home has never been stronger. However, we know that it can be overwhelming, especially when properties are being sold for a median price of about $350,000 and the housing market is saturated with everyone rushing to own their own home before the beginning of another recession or economic collapse. You may wish to become a homeowner for a variety of reasons, including developing generational wealth or creating a retirement investment opportunity. Whatever your motivation for wanting to own a home, there are a few things that you should do to ensure that the process is as easy as possible especially if it is your first time.
Despite some of the challenges you may face, achieving it this year is not impossible if you play your cards right. Some individuals may already have all the pieces in place to purchase their first home. While for others it may take longer, especially those who have loads of debt, reside in a costly area, or just starting out in their career. We are, nevertheless, here to assist you in every step of the journey. From planning, to saving, to the moving stage, we've got you covered.
Before making such a huge financial decision ensure that you are ready to commit, you maintain your credit and you start building your savings as soon as possible.
Here are a few tips to get you ready for this huge financial step.
1. Be sure that you are ready to commit to such a loan:
The most crucial piece of advice we can give to members wishing to own a home is to make sure they are fully prepared to take out a 15- to 30-year mortgage loan. Buying a house is a huge financial commitment and before you apply for a mortgage, make sure you're ready to be a homeowner.
Ask yourself the following questions to see how committed you are:
ü Am I willing to commit to this house and location for the next five years?
ü Do I have enough money in my emergency fund to last at least three months?
ü Do I have a steady source of income?
ü Is it something I'll be able to afford?
ü Is getting a mortgage a possibility for me?
If you answered "no" to any of these questions, you might want to put it off for the time being and continue to save. Also consider whether any upcoming events may have an impact on your location, income, or expenses. If that's the case, these are a few more reasons to hold off on such a huge investment.
2. Maintain your credit
We cannot stress enough on how important it is to maintain your credit when you are in the beginning and ending stages of your mortgage. Lenders consider your credit as a key factor when deciding whether to qualify you for a home loan and how much you can afford. Your credit is also considered when determining the mortgage rate and loan terms offered to you.
As a result, you should avoid making common credit mistakes made by many first-time homebuyers, such as opening a new line of credit or avoiding taking credit entirely. If lenders discover that you have taken out other loans, that your credit amount has increased, or that you have begun to make late payments, your final approval may be jeopardized.
Always make sure to pay your bills on time. Lenders want to verify that your payment patterns are consistent and that you can be trusted with payments in the future.
3. Build your savings now
Do not put off saving for emergencies until you have purchased a home. Let's face it, saving while owning a home can be challenging due to the numerous costs involved with home ownership, such as house insurance, maintenance, and upkeep. Even if your current monthly rent cost is similar to or less than a mortgage payment, buying a property is far more expensive than renting. When you own a home, you are accountable for everything, and all these extra expenses make saving seem impossible.
When things go wrong, and trust me they will, from faulty appliances to roof or pipe leaks, having cash set aside in case of such emergencies saves you from major financial setbacks.
To start your savings journey, you can set up an automatic transfer from your paycheck to your savings account. You can also utilize your savings account to save bonuses and tax returns. You can also identify areas in your life where you can cut costs such as packing your own lunch rather than buying and cutting the number of monthly subscriptions that you have.
Remember that a mortgage is a huge financial decision and you must ensure that you are committed and ready to take on such a journey.
References
10 Critical Questions To Ask Yourself Before Buying Your First Home. (2017, September 19). Https://Www.
Ramsey. (2021, September 24). 10 Tips for First-Time Home Buyers. Ramsey Solutions. https://www.ramseysolutions.
Top 10 Tips for First-Time Home Buyers | Mortgage | Chase.com. (2022). Www.chase.com. https://www.chase.com/
