Buying a house is something that many people dream of doing. People would save up and make plans on how they can go about achieving this dream. But buying a home is not as easy as buying something from the grocery or the department store. It takes a lot of careful planning and proper know-how in order to make this dream a reality.
To make buying a house easy, here are five steps to help you kick start your home buying process:
Before buying a home or even thinking about buying a home, consider your day-to-day or month-to-month expenses. How much of your expenses go to savings? Do you have extra money that you can spare or is your income just enough for monthly expenses? If you compare your income to your expenses and the balance is zero or less than $20, you might not be able to afford a mortgage just yet.
This does not mean that you cannot buy a house on your income. It just means that you have to make some lifestyle changes in order to buy your dream home. List down your expenses and check which items you can do without. Things like your morning latte from that local coffee house, fancy toilet paper, and the like all add up to your monthly expenses. Cut these unnecessary expenses out and see how much you have saved.
Now that you have tapered your spending down or at least had your monthly expenses planned out for the next couple of months, you can get into planning for the right kind of mortgage. Check out the down payments, monthly payments, interest rates, and the frequency of payments. The down payment is the first thing you need to save up for, followed by the monthly payments.
Your income is great and can help you pay off your debt. But what happens if you suddenly get sick or lose your job? Do you have other sources of income that can help you keep up with your mortgage payments? Make sure that you have other means to fund your expenses as much as possible. Be mindful of how you spend the money you earn. Make sure that you save every penny you can.
Make sure that your credit score is in tip top shape by keeping outstanding loans updated and paying bills on time. A good credit standing will give you better chances during the pre-approval process. A pre-approval will give you a specific amount that your bank is willing to lend you. This way, you can start looking for properties within that price range and not waste your time on properties that are beyond your capacity.
That house is way above your price range and you really love it because it has a bowling alley. But do you really need a bowling alley inside your home? Look at houses that fit your needs and match your capacity. Go for houses that can be expanded later on to accommodate a bigger household. You can always add these things later on if you still feel like adding them.
The key to making the home buying process a smooth and hassle-free experience is to be prepared and realistic. Know what you want and balance it with your current circumstances.
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