Buying your first house can seem like an obstacle course of legal conundrums and cascades of money leaving your pocket. When making one of the biggest life decisions of whether you should buy your first house or not, you must have a lot of research behind you. There are a lot of issues to think about. But if you prepare for all the stages beforehand, things don’t have to be as overwhelming.
The 1st step to buying your first house – meeting a mortgage advisor
An important first step when buying your first house is to meet with a mortgage advisor. They’ll figure out your options based on your income and expenses. A mortgage advisor can give you an informed idea about how much you can borrow. As a general rule, you can expect to be able to borrow roughly four times as much as your gross income.
The mortgage advisor might also look at your credit history in order to make the best assessment for your situation.
Breakdown of costs will be crucial when buying your first house
These are the factors that influence a mortgage and could impact your monthly payments:
• Initial deposit – needs to be at least 5% of the home’s value. The more you invest in the deposit, the more affordable rates you could get.
• Mortgage length – mortgages typically last 25 years, but other terms are available. Note that, when interest is added, longer mortgages mean you pay more overall.
• Interest rate – As we said, if you make a bigger deposit, the interest rate will be more favorable. Also, the bank will be looking into how good your credit rating is.
You could take a long time looking into your finances, budgeting, saving money, looking at places, learning real estate terms, and still be surprised with what you actually spent. When buying your first house, you could easily forget that the process will bring unexpected expenses. But what gets even more expensive is actually living in one.
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Yes, buying your first house really is that expensive
Money is probably the first thing you think about when you think about buying your first house. We will tell you that it really is as expensive as you think it is. But the trick is that it doesn’t get easier when you move in.
There is always something unpredictable that makes things even more costly. For example, surprise expenses could come up on your closing day. Just when you think no more writing checks, you find out the previous owner had left a huge bill that now you have to pay. It could be another couple of thousand dollars you weren’t expecting.
Maybe you are moving to the same neighborhood. That’s one of the best and luckiest moves especially if you’re buying your first house. Means you will be more familiar with the market and you know what to expect. With these Florida movers, short distance moves can be simple and easy.
The process of buying your first house is costly, but actually owning a home is the real expense
Besides mortgage payments, you will get bills for absolutely everything you weren’t even thinking of. All sorts of things will need replacing, like plumbing, appliances or the water heater. It will seem like all you are doing is writing checks. Buying your first house can be underwhelming when watching all your money melt away for the upkeep. It will take a toll on you, and it’s hard to prepare for it.
Remember that banks are looking out for themselves and not for you.
Maybe banks will encourage you to sign up for a no money down home loan. While this isn’t the worst idea in the world, it also isn’t the best, because, in the long run, it benefits the bank more than you. According to US News, the advantages of a down payment include lower borrowing costs and lower interest rates. But, the lower your down payment is, the more a lender considers you a risk, which is why they’ll give you worse rates. Therefore you might save money by not putting anything down, but you’ll be losing in the end.
If you don’t do your research, you could likely be talked into a trap from some very persuasive lenders. Just remember this: banks care more about themselves than you.
Buying your first house? Real estate photos are not to be trusted
If you are a millennial, you are probably leaning to looking for a house online. Even if you are not a millennial, it’s 2019! Real estate sites include lots of photos, and the image quality is better than ever. But you cannot trust them, ever. Photos can be tricky! Wide angles can make rooms look bigger, and editing can make everything look more sparkly and brand new.
So don’t rely on the photos. There are homes online you will love, but could be considerably smaller in person. The house you could end up buying could have bad photos online. If you don’t like the old-fashion decor or the bad quality photos, it doesn’t mean you cannot put your loving touch into it. Millennials love aesthetically pleasing homes and decor, but you can always update your new home. Here are some tips on how to relocate your belongings like a Pro.
The process of buying your first house is really quick
OK, at first, it’s really very slow. Looking for the perfect layout and size, picking and choosing, eliminating a lot of options along the way. You keep getting overwhelmed and reconsider your options over and over again. There are a couple of tips on how to make moving less stressful – as much as possible.
But when you finally find THE house, things will start to move very fast. You quickly make an offer and may have to negotiate, in order to lock down that house before the owners get a better deal.
You might have to rethink the way you handle money
Dealing with down payments and deciding on your mortgage rate is just the beginning. A house comes with many bills along with constant financial surprises that unexpectedly burden your household.
Even if you’re good with money, adjusting to that difference is crucial to surviving the change, especially if you didn’t live on your own previously. It will not be easy and could take up to a year to get into a stable rhythm.
Be prepared to expect the unexpected
Truthfully, you will spend a lot of time fixing up your home. Owning a house is a lot of work. You have to take care of it and it will cost more money than in an apartment.
If you happen to be a millennial buying your first house, you’re going to get some reactions from people. People will tell you this was a bad decision that would just be a money pit in this economy. But in the end, you have to just remember what’s best for you and be sure to calculate your options to avoid any financial problems.