For most people in their 20s, buying their first house will become the most important transaction of their life. When you think about it, this will be the biggest loan ever taken and you will buy your biggest asset with it. What if you borrow too much? Or that you buy a house filled with problems you didn’t see?
Buying your first house often means moving into paradise. But if the transaction is not done properly, you may be moving to hell. Here’s a quick guide with crucial points you must take a look before buying your home.
MAKE A REAL BUDGET AND START SAVING ON THE SIDE
If you think you can afford to buy a house because you can sustain paying a $1,000 rent, think again. A house is a lot more than a mortgage payment. You need to put money aside for utilities, taxes, maintenance and improvement. Most people under estimate the cost of maintaining a house and all those little things you don’t need when you are in an apartment. I remember that after buying my first house, I was at Home Depot every weekend spending $100-$200 each time to buy things I needed and didn’t have before moving. So if you can afford $1,000 in rent, my advice is to go one step further. Make a real budget and start saving an additional $300 per month. This will increase your down payment and prove beyond a doubt that you can afford all the little expenses around the house.
MEET WITH YOUR BANKER FIRST
Before you start looking for a house and get all excited, have a chat with your banker. He is in the best position to tell you how much you can borrow and at what rate. He can also guide you on how to save for your down payment and the best type of mortgage for your situation. He will realign your budget and make it more realistic.
USE THE SERVICE OF A REAL ESTATE AGENT
I think this is sound advice for anybody who wants to buy their first property. Chances are you have little Real Estate Experience and the use of a realtor can be a very sound idea. For example, if you are looking to buy a house for sale in Montreal, taking an agent will save you time as he knows which neighborhood is great and still affordable. The agent will walk you through each step of the buying process.
DON’T LET YOUR FEELINGS GET IN THE WAY
Buying a house comes with an important emotional charge. You are about to change a part of your life. Your home is the place where you will spend most of your day besides work, it must be chosen carefully. On top of this, if your feelings get in the way, you may start dreaming of a house that is more than you can afford. Unfortunately, you will always find a bank to lend you too much money and you will buy the house of your dream. Then, you will realize that you are stuck inside and can’t even afford to buy a newspaper.
PAY FOR AN INSPECTION
I know that when you buy a house, there will be tons of extra expenses. You will have to pay for moving, the lawyer, remodeling, taxes, etc. You may want to try to reduce your expenses as much as possible. But if there is one place you should not skimp in your budget is with the final inspection of the house. The inspector will check important key points around your property to make sure you don’t buy a lemon. These few hundred bucks could save you thousands in the future.
Spring is around the corner and this will be the right time to buy a house. Start with your budget and look around on the internet. Good luck with house shopping!