Planning To Buy A House? Plan Your Finances First
One of the biggest purchases a person can make in life is that of a house. It doesn’t matter whether you’re aiming for a one bedroom apartment or a five-bedroom detached affair; a house is a big responsibility. The responsibility doesn’t just come with cleaning the space you’ve purchased, but keeping up with the new mortgage payments, having the cash to hand for any repairs and generally being able to get by. A decision as large as purchasing a home should always be led by your finances first, and your emotions later. Most people buy a house to have a secure future, others do it for their expanding family and the potential for leaving an inheritance behind.
Getting yourself ready to buy a new home is easy but getting your finances in order is definitely not as simple. It would be too easy to simply have the full cash amount for buying a new home outright. It takes a lot of planning to make enough room in your life and your finances to go through the motions of buying a house. It goes without saying that you are making a huge investment and commitment when you buy property. However, most people don’t consider that the return on that investment can make the difficulties in saving worthwhile! If you are living paycheck to paycheck, you may feel like purchasing your own home is too far off to think about. Realistically, you can change your current circumstances to make buying a home a lot easier, as there are a lot of avenues out there for buying your first home.
Deciding where to buy your home is just as important as when you should buy it. The housing market fluctuates at a surprising level. Financially, there are a lot of things you can do in your planning to get you to your dream home. it may take some time, and it will absolutely take a lot of hard work, but it can be done! Check out our rules below to help you with your financial planning for your first home:
Look First. One of the first things you should do is look at your current financial outlook before you buy. Never feel pressured into buying a house you are not financially ready to buy. Your financial picture will dictate to you whether you are ready to buy a home or not, and if you are swamped in debt or stretched thin at the end of every month, then you likely aren’t quite ready yet. You have to work on straightening out your bigger picture before you start planning to buy a house you won’t be able to keep. As much as you can, pay off your debts. Not only will this go a long way to getting your credit score up, it will relieve you of financial pressures. This can include any student loans, as a mortgage will be far easier to obtain and keep up with if you’ve paid off a huge chunk of debt. Have a projection of your income for the next three to five years, so that you can determine whether you can even afford to keep up your mortgage payments. Doing this can help you to determine your risk when it comes to having a mortgage.
Aim High. Most people feel that they should be aiming to buy a starter home that may need some fixing up. The reality is that you don’t have to compromise on what you want. If you want to aim for a dream home from the get-go, you should! Buy the home that works for what you want now. If you are in need of three bedrooms, buy the home with the three bedrooms. Yes, you can always trade up again later, but you should aim for the home you want not the home you think you should be buying. You can play the long game, buying a smaller starter home from foreclosure proceedings and going for a larger house later on. However, it’s not a necessity anymore. What you can afford in the long term is what you should be buying.
Plan Your Mortgage. It’s an outdated idea that you should do what you can to pay your mortgage off as fast as possible. Staying within the limits of a thirty-year mortgage can offer you lower monthly repayments overall and offer flexibility. Sure, you can add to it as you go so that you can pay it off faster, but there’s no real need to do it if you are comfortable with the repayments that you have. It’s far more important to pay off any debts you accumulate, start a college fund for the children and be able to breathe within your finances.
Research Correctly. Planning your finances and getting ready for buying a home is going to keep you busy and full of stress. Having access to a computer to be able to search for a home is going to be invaluable for you, and it’s not just the house you’d be searching for. Comparing mortgage deals and school districts is going to be far easier for you if you have a computer at hand. You can easily compare homes and safe districts when you are able to do research outside the box. This is all done at your own convenience and you can still choose to work directly with a mortgage broker if you want to. The beauty of it is that you will have compared all the various mortgage options available to you and you can make an informed decision on your broker.
Financial planning is difficult when you don’t know where to begin, but keep an open mind and get your finances in tip top shape before you start mortgage hunting. It will make your first home purchase a far easier experience if you are ensuring you are as financially comfortable as possible before you begin.