Everybody looks forward to the day when they no longer need to pay rent. They look forward to having a place that is going to be under their name. Buying a house though is an important investment- perhaps, the most important you are ever going to make. You want to make sure that you are going about it right. You want to make sure that you will not end up finding yourself broke after.
Whether you are a new home buyer or one who has already made a similar purchase before, there are always areas that you would want to learn more. There are always parts of the purchasing process that you can do better. So, here are some of the things that you definitely should do to make sure that this particular investment is not going to leave you penniless or worse, bankrupt.
Decide where you want to live
You would not want to buy a house in a place where you would not even likely see yourself living for the next five years at least. A lot of people made the mistake of going for the purchase without even determining whether the location is up to their taste and ended up reselling the house after a very short stint of staying there. The result- they lost, even more, money since the house ended up selling at a much lower price than how much they initially bought it for.
Get to know your credit score and fix it
You will realize by now that the mortgage that you will be pulling out from the banks will have to rely significantly on the credit score you have earned. How much you are going to need to pay for interest rate depends on it too. The same is true for the downpayment. This is why it is prudent to secure a copy of your credit report before you decide on scouring for places where you can apply for a mortgage. This at least should give you the chance to have it fixed if there are some red flags and hits on there.
Secure a pre-approved mortgage
A lot of people may not be aware of this step, but this is crucial. This is where you get to know how much banks are going to be willing to loan to you when you purchase the house. You seriously cannot start shopping around for the best properties that will suit your needs best when you have no idea how much it is that you can even afford to spend in the first place.
Save up for at least six months to a year
Just because you have been pre-approved for a mortgage does not mean that you are ready to go. You have to remember that there is a down payment that you need to cover and you need to pay that before the purchase can proceed. Save up aggressively for the next six months or so. Also, if you can, it is always better to pay a higher down payment than what was stated to help shave down your mortgage amount as well as lower the interest rates.
Do not bite more than what you can chew
Too many times, people end up looking at the world with rose-colored glasses and attempt to buy a property that is just way beyond their means to afford. You should never buy anything that is 20% more than the combined yearly income you are earning. Doing so is only likely to cause you to have a hard time paying it back. Remember, mortgages can take five or more year to get paid off. Make sure that you will have the figures to pay for it every month moving forward or you will be in big financial trouble.