Are you thinking about purchasing your very own home for the first time? Perhaps you’re sick of renting or you’d just like a permanent place to call your own. Whatever the case may be, make sure you’re certain that you’re ready to buy your first home and are doing it wisely. Follow the helpful tips below and your first home buying experience should be a breeze.
1) Check Your Credit
One of the first things that banks will do when offering you a loan is check your credit. If your credit is poor, they will either deny you a loan entirely or they’ll hike up your interest rate and down-payment amount to protect themselves in case you default.
Before you even head to your bank or credit union (or HomeStart Perth for that matter), do yourself a favor and check your credit yourself. CreditKarma.com is a great place to do this since they’ll provide you with a free report from Transunion (one of the major three credit report companies) and they will tell you why your score might be low and what you can do to improve it.
2) Save Up 20%
If you really are serious about buying a home and making it your long-term residence, then I would suggest that you save up 20% for your down-payment. With this 20% you can basically insure that your home value will never fall below what you owe the bank and you can therefore avoid PMI payments to the bank as well!
I understand that saving up 20% of the purchase price might take quite a long time, but this process will teach you to scrimp and save and to live within a budget, which is very important for when you own a home and have unexpected items that are in need of repair. Make a plan to sock a large amount of money away each month and save up that 20%!
3) Find a Deal
So during what time of the year should you buy a home? The absolute best time is when demand is low and house prices can be found for cheap. For many areas in the north, this means winter time. Nobody wants to buy a house during the holidays and they certainly don’t want to move their stuff in the snow. If you don’t mind this and would be willing to make a purchase in the winter to save a few thousand bucks, then I would certainly encourage you to.
If you want to find even more of a deal, don’t be afraid to find a fixer-upper home. Ideally, you’d like to find a home that is appealing on the outside, but could use a few updates on the inside (ie. carpeting or flooring, vanities, etc). If you are fairly confident that you can repair or replace the rundown areas of the house, then that means you can probably do fairly inexpensively as well. By purchasing a fixer-upper, you can save yourself another 10%-20% off the fair market price.
Are you ready to buy your first home?