Are You Ready to Buy A Home?
Are you really ready to buy a home? There is a lot to think about before you even begin searching for a property. Finding the right property or mortgage are major considerations, of course. However, you should first assess your current finances, life, and work situations.
When you are about to embark on the journey towards buying a new home, ask yourself the following questions:
- Are there any circumstances within the next five years that could change your financial situation for better or worse?
- Are you willing to remain in the same property for five years before wanting to move?
- How confident are you that there will be stable income to make monthly mortgage payments?
- Home repairs are expensive. Will you have the budget to pay for repairs, or can you carry out any work yourself?
- Do you know how long you need to own a home before the investment begins generating a return?
Living in a home for at least five years is typically recommended. However, there are factors, such as equity in the home, the current housing market, and rental prices that can dictate whether you should stay put or sell up.
Benefits of Buying
There are a number of benefits to buying a home – not all of which surround monetary value. When you buy a property there is much more freedom to make the types of changes that a landlord wouldn’t allow. You can carry out your own renovations, remodeling, and build extensions to an owned home.
Rental payments are not tax-deductible. However, you may be able to claim a tax deduction for interest paid on a mortgage. Tailored mortgages help people from all walks of life to manage monthly payment amounts in a changing market.
Benefits of Renting
You don’t have to worry about repair costs or doing the work yourself when you rent. In most cases, the landlord is responsible for any repairs to the property and has a duty of care to tenants. Rent does not include homeowner’s insurance or any property taxes; those costs are also the responsibility of the landlord.
When you are moving in the private rental sector, there is a lot less involved. You don’t have to worry about selling a property or finding suitable tenants. Selling a home and buying another property is a lot more complicated and can be stressful.
Evaluating Your Finances
There are few purchases that come with a higher price tag than a new home. Before you even consider jumping into the real estate market, think about your current and future finances. What you have coming in and going out of bank accounts is important. You can assess bank and billing statements to get an idea of your current finances any outgoing costs.
The stability of your income is the first aspect of finances, which requires careful consideration. Look at how much money you have that can go towards saving. Next, think about a budgeting plan for managing ongoing debts, such as credit card payments and health insurance. When it comes to credit card payments, debtors who keep debts low may receive better mortgage rates.
Emergencies are one of the areas that new homeowners often do not think about as much as they should. Typically, you should aim for having the equivalent of three months of savings. Before you can save money for emergencies, there is the down payment and costs of closing the sale on a home to cover. Both of these payments are essential, so don’t rush into buying a home if you can’t afford them.
Working Out Your Down Payment
The cost of the property and the type of mortgage will largely dictate the down payment percentage needed. If you want to bring down the amount you pay each month, increasing the down payment amount is advisable, if you can afford it. As a working number, consider most loans are based on a down payment of at least 5%. Anything above the minimum is additional equity in the home and lowers the mortgage amount to repay.
The closing fees connected to processing a mortgage can vary. The type of mortgage and value of the property may impact closing fees. However, typical closing fees fall between 2% and 5% of the property’s value. It is important to work with a reputable lender who understands your needs and helps you to reach your financial goals. Owning a home should be an enjoyable experience, so you shouldn’t be in a constant battle just to keep your head above water.
At Galaxy Lending Company, we can help you finance your dream home with a tailored mortgage loan. For further guidance on the challenges you may face as a new homeowner, reach out to our offices today.