Have you been thinking about buying your first place, either to live in yourself or rent out for added income? Then this is a great article for you. Making a decision to put down roots somewhere and signing the papers for your first property is super exciting, yet sometimes also overwhelming if you don’t have all the info and data. No one wants to make a mistake in this arena, so it’s a fabulous idea to get tips and tricks before making a huge leap. It may take some careful planning and research, but it’ll be worth it once you’ve found your forever home.
Table of Contents
Assess Your Financial Situation
This is absolutely the first step, namely to evaluate your finances and see what you can comfortably afford. The word ‘comfortably’ is key here, because you never want to be in a situation where your mortgage is way too high for you to cover, and simultaneously live a beautiful and balanced lifestyle. Start by taking a close look at your financial health and your current earnings versus your spending. Determine how much you can afford to spend on a property and then see whether you can maintain that for about twenty years, which is the average duration of a mortgage. Also be sure to take into consideration any debt that you or your partner may have, since this can impact your chance of getting a loan from the bank. Calculate your debt-to-income ratio, which is a crucial factor lenders consider when assessing your mortgage application.
The next step in this exciting journey is to save for a down payment. Try to aim for 5% to 20% of the total purchase price including transfer fees, because that’s what most banks will want you to have and also what will give you a good jump start. The more you can save, the better your chances of securing a favorable mortgage rate and avoiding high interest rates. There are also other costs that you should keep in mind besides the down payment alone, such as closing costs, property taxes, home insurance and ongoing maintenance expenses. When you sit down to do your initial assessment, make sure that you add in the costs just mentioned as well as leave from for any other unexpected costs. Better safe than sorry.
Start Making Some Investments
The property that you’re aiming for should be an investment in itself, that is if you buy at the right price and in a great location. However, there are smaller things you can do to bulk up that initial capital. Renting out a room at your current place is a good start, or look into trading and other innovative ways of getting additional income. You don’t need to become a full-time stock trader, but it never hurts to research and find out about various avenues of making added income. If you are interested in finance, crypto and trading, then learn the basics and familiarize yourself with fundamental investment concepts such as stocks, bonds, mutual funds and ETFs. Use resources like online courses, books and financial news, and keep an eye on the Bitcoin Price Value Update to see whether it’s a good time to buy or sell. Here, it should be noted that you must assess your comfort or risk level since tolerance varies by individual. If you don’t love the idea of risk, which is perfectly understandable, then consider low-cost index funds or ETFs, which offer exposure to a broad range of assets Give it some thought, start small and also consider setting up automatic contributions to your investment account. Regular investing helps build wealth over time and can mitigate the effects of market volatility.
Define Your Needs and Preferences
Okay, so you’ve sat down and written or typed out your budget. You’ve saved and invested a little, and you’re ready to start looking online for an investment property that you can maximize or a place to call home. Now it’s time for you to identify your priorities, meaning that you should consider what you need in a property. Do you need multiple bedrooms? Is proximity to work or school important? Make a list of must-haves and nice-to-haves to guide your search and help you short list or rule out places much faster.
If you have kids or other responsibilities, then research and explore various neighborhoods to find one that suits your lifestyle. Look at factors like commute times, local amenities and school quality. A good tip from an estate agent is to visit different areas at different times of the day because this can give you a better sense of the neighborhood’s atmosphere throughout the day or even week. If you aren’t yet sure on the neighborhood or how many bedrooms to look for, you can also start much smaller and consider managing properties to get a feel for what you want in your own home.
Conclusion
Buying a home or rental property is so exciting, with many steps and decisions to take, specifically if you’re a first-time home buyer. It’s good to plan and pay attention to detail, assess your finances, understand what you can afford and don’t live beyond your means. It is much smarter to save and start small, than you buy a huge property to impress others that you won’t be able to afford in the long run. With the right approach, you’ll soon be enjoying the benefits of homeownership and making your new house a home.
