There are few things you will do in your lifetime that will compete with the excitement of buying your first home. It is a major life changing event so you need to ensure that you have all the information you need to make the right buying decision. Here are some important tips to follow when buying your first home:
- Establish a budget and stick to it – From the start of your home buying journey, you should establish a budget. You can use the mortgage calculator to help determine how much house you can afford, but be aware that the mortgage calculator does not give you all the details. To learn more about What the Mortgage Calculator Doesn’t Tell You, contact a professional mortgage broker to get all the information you need to establish a realistic budget.
- Perform a sanity check: Is buying a home the best choice for me? This question must be answered honestly after careful examination of your finances. Ensure there will be a stable and adequate income level to carry the housing cost, your debt and your non-discretionary expenses. If purchasing a house with a partner or family member, be aware that any failure on their part to pay their portion of the mortgage will become your obligation.
- Understand the full cost of your mortgage – Your mortgage costs are much more than just the interest rate. There are upfront and early payout fees, pre-payment penalties and possibly renewal fees that you need to take into account.
- Get the mortgage that suits you and not the lender – The fact that you have been preapproved for a mortgage does not mean that mortgage is your best option. You need a trusted mortgage agent to assess your needs and find you best mortgage on the market to meet these needs. Lenders are not your friends, so make an informed decision about your mortgage options.
- Buy a home in an area that will increase the value of your home – Buying a home in an area with low likelihood of appreciation is worse than renting a home in the same area. This is because the cost to carry that house will never be recovered when you sell, you would’ve lost the opportunity to save money had you chosen to rent instead.
- Buying a home for what it is worth – If you buy a house for much more than it is worth, you are at risk of being upside down on your mortgage or your equity position will be much less than expected. Ultimately, you will be required to pay out of pocket if you decide to sell the house in the future. So after all the money put into the house and mortgage costs, you may end up with a loss on the house.
- Keep your emotions in check – Never be in a rush to sign-off on any document unless you fully understand the economic impact and your needs are being met. If you feel pressured, simply explain that you will make a decision later, and then get expert advice from a qualified mortgage broker.
- Ask for strategies to payoff mortgage quickly – Getting a mortgage is a long-term commitment and while there a ways to lower your monthly payment, there are several other ways to pay off you mortgage faster. Ensure these options are negotiated in your mortgage upfront.
- Consider mortgage options to renovate – Ask for ways to get extra money to renovate and add value to the home. Let your mortgage agent negotiate renovation costs upon closing to get your house to the standard you require.
- Get expert advice – Everyone should work with a mortgage broker to secure their mortgage. This the best way to access a wide range of mortgage options with one application. The mortgage broker has more negotiating edge with lenders than individuals who try the “do-it-yourself” route. The service of the mortgage broker is especially beneficial to the first time home buyer, because they are susceptible to getting into mortgage commitment that they may later regret.
For a free, no obligation assessment, contact Your Mortgage Advocate 1-866-313-3339.