Are You Ready ?
If you are a first-time homebuyer thinking of purchasing, this step by step guide will help to steer you in the correct direction. Before we leap right into it, you have to be sure these 3 things are ready: you, your bank account, and the real estate market
Are you prepared? Be certain.
Having a roof over your head will bring you great joy and pride, but with that comes responsibility and sacrifice. There’s the apparent monetary accountability, but your home will correspondingly require continuous care and maintenance. This could range from minor repairs to larger replacement costs, along with time needed for yard maintenance.
Is your bank account ready? Double check.
Your first home will be the greatest financial commitment you’ve ever encountered. You need to be a proficient saver, and be good at regulating debt like student loans or credit cards. Idyllically, you’ve also saved up for a plethora of down payment, and closing costs. Be sure to converse with your financial institution regarding the Home Buyers Plan too.
Is now a good time to buy? Here’s the finest market tip you’ll ever receive.
Markets rise, markets decline and even the cleverest professionals cannot precisely forecast when a market will reach its pinnacle or bottom out. The positive information is, if you’re purchasing a home as a long-standing venture (and for long-term gratification), you’re safeguarded from temporary fluctuations in the market. Progressively, real estate has nearly always amplified in value.
*Remember, your first home may not be your dream home, but it will definitely change your life and take you a step closer towards your dream home !
How Much Can You Afford ?
Prior to starting the search for your dream home, let’s find out your range. Being aware of your exact budget range is the primary and most significant step in purchasing a home. Why?
A home is a large purchase.
A house may perhaps be the most pricy possession you’ll ever acquire, and there are tons of expenses you may not even be aware of. Over-all costs differ individually, however, it’s almost certain you will not have that amount of money accumulated up. Hopefully you have enough for a nice down payment, of course, you will have to get a mortgage! Here’s the scenario outlined elaborately:
A. One time expenses ( down payment, legal fees, inspection fees, taxes)
B. Monthly costs (mortgage, utilities, maintenance, insurance, property taxes)
How much will a bank lend you?
This ultimately depends on how much your monthly affordability is . Your affordability is determined considering two lending principals.
1. The Gross Debt Service (GDS) ratio calculation: your monthly housing expense should not surpass 32% of your gross monthly family income.
2. The Total Debt Service (TDS ) ratio calculation: your monthly housing expense and payments on all of your other debts (including loans, credit card and lease payments) should not surpass 40% of your gross monthly income.
You now have more insight on where you stand in the home buying process. In the next blog, you will see all the options that you have in terms of locations and type of homes.