It can be quite daunting to buy your first home especially when you always hear how volatile real estate can be. Buying a new home is a huge commitment, and once you decide to buy a particular house, you can not detract from the decision without financial repercussions. Amidst rising home prices, taxes and skyrocketing mortgages, it is essential to make a knowledgeable and prudent decision when selecting a home for yourself. Although researching and making decisions can be stressful, it is best to relax and look at some primary considerations when buying a new home. Some careful planning, saving practices and realistic expectations can give you a great headstart to buying your dream home.
Building a credit history
If you are trying to buy a home in Canada, the first thing you need to have is the best credit score for a great mortgage rate. If you don’t have a credit score, start building one. Use a credit card for casual and emergency uses and pay them off on time. According to a leading real estate specialist, a high credit score can help you to qualify for a mortgage at considerably low-interest rates for your first home purchase.
Another critical aspect of being a lucrative borrower is being debt free. It is crucial to know that any outstanding debt that you have is counted against the amount of money you can borrow. Before lending, your financial organization or lender will always review your debt ratio. If it is too high, you may not qualify for a loan. Ideally, your debt ratio total should be less than 40% of your monthly income.
Apart from the sale price and down payment, there will be several ad hoc expenses that will add to your new home in the first year. Many experts believe that at least $8,000 to $10,000 is spent on the house in the first year. This includes the moving in costs and all the little things that come with buying a home like paying for utilities, furniture, taxes, title insurance and maintenance.
Right savings account
Another critical aspect of planning your finances is keeping your money with an FDIC member account. They offer highly competitive rates in comparison to the average big banks.
Ensure that your funds remain easily accessible. A traditional savings account also works, although it has a lower interest rate.
Splitting your paycheck
According to a leading financial analyst, couples divide their expenses into three categories: survival, livable and comfortable. The survival expenses include those bare necessities which are mandatory. Things like food, clothing, insurance or minimum credit card payments fall into this category. Credit experts suggest that if possible, the couple should try to live on only one paycheck so that they can use the other paycheck to cover for their move in and $10,000 cushion money.
Meet with a housing counsellor
One of the critical advantages of meeting with a reputable counsellor is that they work with you to review your current and expected housing expenditure and give you a realistic picture. Moreover, as a first-time buyer, you may not even be aware of any new promotions that may be running to help home buyers get some support and assistance or perhaps some subsidy. A housing counsellor can help you to understand and know them.
Once you have decided to buy a home, remember that every dollar counts! It is best to develop a saving mindset. Review your monthly spending and make deliberate choices to reduce unwanted expenses. Every penny saved is every penny earned. Spend less than what you make so that you don’t have to depend on credit cards. It is best to establish some expenditure rules with your spouse or partner and find the best way to set a budget. Making small changes like packing your lunch each day or unplugging appliances can help you reduce your bills. You can also keep looking for discount coupons to get some deals on the bigger spending.
If you are looking to consolidate your debt or plan a new mortgage, Lending Experts can help. Their team of experts can help you to plan your mortgage rates, reduce your debt and make the home buying an easy and comfortable for you.