After years of dreaming, saving and house hunting, you think you just might be ready to make that first big purchase – a house. You’ve filled out all kinds of mortgage loan calculators, and think you’ve considered every financial possibility.
However, buying a house involves a little more than just initial financing. Here are some valuable tips.
Best ways to save for a house
There’s really no surefire way to save for a house or, rather, to save for the down payment. What works for one may not necessarily work for another.
Faber & Company Inc. suggests you look for ways to cut back on things you spend the most on.
Here are some ways you can cut back and have some extra money for that down payment or any other home purchase-related items:
- Eliminate habits. We all have them, whether it’s smoking, drinking soda, going to the movies, or eating out. By eliminating these expensive habits, you may actually live a healthier life, while gaining some extra cash each month.
- Eliminate impulse spending. If you’re thinking of buying something you really don’t need, hold off for a month. Chances are you’ll either have forgotten about it at the end of the month, or will decide you no longer want it.
- Eliminate credit card purchases. Pay cash for any purchases unless it’s an emergency. If you don’t have the cash, don’t make the purchase. When it’s time for financing your house, credit card debt can lower your credit scores.
Make sure you’re financially ready
Just because you think you can handle the mortgage payment doesn’t necessarily mean you can afford the other expenses that come with home ownership, such as home insurance, property taxes and the never-ending maintenance that goes with owning a home.
Consider taking 10% of your income and putting it in a savings account each month. If you find this difficult, you may not be financially ready to buy a house.
Although mortgage calculators are great tools that give you a general idea of what your payment may be, they don’t take into consideration rising interest rates, cost of living increases, or other additional expenses that may crop up.
Avoid an Edmonton foreclosure, and check all the different places your money may go in the future to plan ahead.
Shop for financing
It’s never too soon to start shopping for a bank to finance your mortgage loan. The more you shop around, the better your chances of finding the best deal. Compare not only interest rates but mortgage terms and mortgage costs.
Keep in mind that, in addition to the cost of your home, you may also have to pay some closing and settlement costs when you purchase your home, which can vary from bank to bank.
Purchasing your first home can be very rewarding and exciting, but nothing can take the thrill out of home ownership faster than financial difficulties. Plan ahead and make sure you’re financially ready for what will probably be the biggest purchase in your lifetime.
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