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Buying your first family home can be exciting and hectic at the same time. With the enticing real estate trends, you may be tempted to make some impulsive purchases that can hurt your financial objectives. The following tips will help you handle the home-buying process with ease as a first-time homebuyer.
1. The properties you can afford
Before you begin looking at properties or even suburbs, ensure you know the type of properties you can easily afford. That means the maximum amount of money you are prepared to pay every month, not the maximum amount you can borrow. Having this information will help you make the right decision because home loan repayments and the costs associated with owning a house can significantly impact your budget.
Carefully plan your monthly budget keeping the loan repayments in mind, adjust accordingly and live on the new budget. That way, you can make sure your mortgage will not become a burden, and your family will be able to live their lives the way they want to.
2. Decide on your home’s location
Many first-time homebuyers are usually young families or young professionals looking for convenient access to culture, arts, shopping, good food, and recreational activities. As a result, pedestrian-friendly areas are ideal for people getting started in up-and-coming communities or revitalized downtown neighborhoods with character and history. For instance, if you prefer living in a multicultural city with a mix of good investment opportunities and recreational facilities, you can opt to buy a home in Toronto or your desired location.
A good house is not good enough when situated in a bad area. Your first family house should be in a desirable location within a good neighborhood. If you are a first-time homebuyer and are on a tight budget, you might have to make some compromises in the first place you choose. You might not be able to afford your dream house or preferred neighborhood, but you can get close to them.
3. Know your credit score
Your credit score will impact your qualification to receive a mortgage. Lenders will use the score to determine your interest rate. You should check if your credit reports have any errors before you apply for the mortgage. If you are purchasing a home with your spouse or another co-buyer, the mortgage lending institution will consider the credit scores of the two buyers in the application. Also, remember that it can take a minimum of six months to improve your credit score. Therefore, plan to improve your credit score in advance through the following methods:
• Checking your credit reports and double-check for accuracy
• Settling all your debts promptly
• Do not close your credit cards to avoid lowering your score
• Having multiple tradelines, which include credit cards, car loans, student loans, etc.
• Stay updated on your credit score.
4. Available mortgage options and pre-approval
There is a wide range of mortgage options. And each mortgage option has its specific terms and regulations. It would help if you explored each type to determine your most suitable mortgage option. Check on the interest rates and payment plans before settling on any of them.
Your first family home’s cost needs to go hand in hand with your allowed loan limit. Confirm from your lender the amount that you qualify. Your loan amount will depend on factors such as your credit score, assets, monthly income, and your pending debts.
Most home sellers will also require a mortgage pre-approval. It gives the seller confidence that you’ve access to enough finances to purchase the property. Ensure that you complete all the necessary paperwork with your lender and ask for a pre-approval.
5. Buy home insurance
The other thing you need to consider during your mortgage process is securing home insurance for your residential property. You may be surprised to know the number of factors that come into play in determining your policy’s cost. Some of the variables include the home style, proximity to the fire department, its roof, among others. Therefore, it is essential to spend ample time looking for home insurance that will not put a dent in your wallet and one that you are comfortable with.
Your first family home is one of the biggest purchases you will make in your life. To avoid making expensive mistakes, engage a real estate professional in the process and implement the tips highlighted above until closing.