For first-time home-buyers, the thought of a mortgage or investing in a real estate property can bring mixed feelings of excitement and fear. Many feel overjoyed about owning a home, but the great feeling can turn into disappointments if expectations are far from reality. Even if you are buying a home for the first time, you should arm yourself with knowledge so you will know what to expect-from preparing the required documents up to purchasing a home. Everything must be properly set so you do not end up feeling disappointed.
Expectation #1: We have enough money for our down payment.
Every potential real estate buyer wants to make sure that they have saved enough to pay for the down payment. Unfortunately, things do not always seem to go as planned. Due to a lack of research and insufficient information, many home buyers are unable to pay for the down payment. Although you will only need to pay at least 5% of the purchase price, paying 20% or more of the total price prevents your property from being classified as a high-ratio mortgage. If you have your sights set on a real estate property, be sure that you have checked all the details including the amount required so you can secure the property.
Expectation #2: All we need is the down payment to own a home
Focusing on the down-payment alone can spell disaster because there are other costs that you have to be aware of when you decide to buy a home. Some of the costs associated with moving or buying a home include the property transfer fees, legal fees, appraisal fee, moving costs and the searches and title insurance. If you are going to factor these fees into the total costs, these will be approximately 2% of the purchase price.
Expectation #3:Home ownership is similar to renting a home.
The thought of owning a home can get anyone excited. However, not knowing the financial implication of the transition can hurt your pocket in the long run. When renting a home, you will only have to think about a few aspects such as utility costs and the rental fee itself. When you buy a home, you need to have money to cover extra fees for property taxes, insurance, extra utility costs and much more. Without analyzing your budget, you might bite off more than you can chew. Before you purchase a home, make sure that you check your budget because trying to stretch your money to pay for your mortgage can be quite stressful.
Expectation #4: We can spend the money we borrowed for purchasing a home
When you qualify for a loan, the first thing you will usually do is to determine the ideal amount of money you should spend on purchasing a home. While you can pick any price range depending on your preference, it is necessary that you choose an amount that will enable you to accommodate other expenses like upgrades, updates, and home renovations. When looking at homes, you should not only focus on aesthetics but on their practicality as well. If a property only requires a little more work, then you can decrease the amount of money you are going to borrow. Be open to more options as this technique can help you to save a good amount of money in the long run.
Knowing what you can expect from taking out a mortgage loan will help you to manage your finances. First-time home-buyers do not have to feel overwhelmed with the changes taking place in the mortgage industry. By obtaining the necessary information, you will be able to stay on top of these changes.