Are you thinking about purchasing your first home? This isn’t always going to be the right decision, despite what the media might suggest. If you keep up to date with the trends in the media, then you will often see that they are encouraging young buyers to purchase homes as quickly as possible. A key reason for this is that it does help strengthen the market but that doesn’t automatically mean it’s the right choice for you. It largely depends on your unique position. So, let’s explore whether you are really ready to commit to this choice right now. There’s definitely more factors than you might expect to weigh up here.
Your Credit Rating
It’s absolutely vital that you do check your credit rating before you buy your home. Buying a home is always going to result in you needing to borrow money. There’s no harm in borrowing money as long as you can afford to get a good deal. In other words, you need to make sure that you’re not hit by a bad mortgage option and these do exist on the market. One of the ways to avoid this is to make sure that you are taking the right steps to improve your credit rating. There are a few ways to do this.
For instance, you might want to think about borrowing money that you know you will be able to afford to pay back.
The Market
Even if you are in a strong position to buy, you could still face issues here. Specifically, you need to make sure that the market is in the right position and there are no guarantees. You need to research the market carefully and ensure that homes aren’t selling at pieces that are too high. If this happens, then you can end up with a mortgage shortfall. If this happens, then you will lose money on the home when it’s time to sell. To avoid a mortgage shortfall you need to make sure that you are purchasing a home when overall prices are low, at least in the area that you are looking at.
Saving For The Deposit
You need to make sure that you are saving enough for a deposit to buy your property. A home deposit can be anywhere between 5% and 20%. It’s recommended that you do aim for the higher bar here. That way, you can avoid some of the more expensive interest costs that are going to hurt you more in the long term. Don’t forget, if you do find that your interest rates are too high, then you can always look at a refinance home loan to ensure that it becomes far more affordable.
Your Lifestyle
Next, you should think about different elements of your lifestyle. For instance, you must consider your income. Most mortgage companies will have a target income that you will need to hit if you are interested in borrowing money from them. If you don’t reach this point, then you are going to struggle to get a finance option that is going to match your needs. The big danger here is that you could end up being thrown head first into debt.
The Extra Costs
Don’t forget to look at the extra costs. You might think that the biggest cost of buying a home is the mortgage. However, this is not the case and the reality is that there are multiple large costs that could hit you, particularly after you buy. For instance, you might need to replace certain parts of the home. Replacing parts of the home that are causing you issues could cost you thousands overall.
One of the ways that you can handle this is by ensuring that you have a cushion of cash saved particularly for these unexpected bills. That way a home purchase won’t hit your bank balance harder than you would like.
We hope this helps you consider everything that you need to think about when you are deciding whether to buy your first home. Remember, if you proceed with this decision, then you are going to be changing your finances for the foreseeable future. You need to make sure that you are in the right place to do this and weigh up all the different factors that come with a change like this.
If you are unsure about whether now is the right time, then ultimately it could be best to wait. That way, you can make sure that you are on solid ground here.
