For the majority of individuals, purchasing a home or property is the biggest purchase decision we will ever make in our lives. Without taking the proper precautions prior to purchasing that property, however, the decision can lead to devastating financial consequences.
Buying a property of any size requires time, research preparation. We have outlined the steps you should follow to make sure that you are prepared and will be able to get the most out of your property below.
Boost Your Credit Score
The first step anyone tempting the idea of purchasing a house for sale in Sathon is to look at their credit score. Even if purchasing a home is years into your future, the more time you give yourself to boost your credit score, the better. The higher your credit score, the better interest rate you will get on your mortgage, and the better the interest rate, the more you will save over the course of owning the property.
Balance Your Cash Flow
A question which most potential home buyers have is how much of their cash flow they should be dedicating towards their mortgage each month. As a good rule of thumb, your total monthly payment should not take up more than 30% of your take-home pay.
Have a Sizeable Down Payment
Most homeowners will not be able to pay the full balance owing for a property outright, but you should have a down payment which is 10% or more of the value of the home. The larger the down payment, the smaller your monthly payments and interest will be.
Be Prepared For Surprise Expenses
Homeowners also need to have some extra money to set aside per month for unexpected expenses. Some of the most common expenses include:
- Property taxes
- Maintenance fees
- Home renovations
When calculated, these fees can add up to being hundreds of dollars each month. Every homeowner will have to have a financial safety net or appropriately plan to pay for these fees each in order to keep their property in top shape.
Decide How Long You Will Be Living There
When purchasing a property, it is important to consider how long you plan on living there or renting it out. In order to make the most out of your investment, it is best to be in the home for at least a decade. Not only will property values likely go up, but you will then be able to avoid paying the hefty realtor fees which can be anywhere from 5% to 10% of the selling price of your home.
Be Pre-Approved For Your Mortgage
The finances are aligned, and you have decided that you are ready to become a homeowner. Now you will need to determine how much you can afford when purchasing a new home.
One good way to determine a realistic monthly mortgage payment for yourself is to visit a mortgage lender and to receive a pre-qualification letter from them. This tells you, your real estate agent and the sellers of properties you are interested in what you can realistically afford and which properties you should be looking at.