Most people struggle when making a large purchase like a home, not only because of the legal requirements but also because of the financial commitment.
Here are 3 tips that are helpful when beginning the homebuying process, especially for first-time homebuyers.
#1 Know Your Price Range
One of the biggest mistakes that homeowners make is choosing a home that is beyond their price range. Remember that you’ll be paying for a home for a long time. A crushing house payment could be difficult to manage.
In order to find a reasonable mortgage, you need to look at the numbers. Your mortgage broker can help you analyze your income and debt, and the current mortgage rate to determine an acceptable amount when purchasing a home. But beyond that, examine your personal budget that includes all your expenses, and thoughtfully determine how much you can spend on a mortgage payment.
#2 Choose A Shorter Term Mortgage
When budgeting for a home purchase, also consider various payment terms. 25 – 30 years is the typical term for most mortgages, but the sooner the mortgage is paid, the more money you’ll save in the long run.
If possible, choose a shorter term mortgage, and you’ll save a lot of money.
#3 Make Extra Payments When Possible
Once you have your new home, consider paying it off by making extra payments. While this may seem like a challenge, it can be accomplished with careful budgeting.
Making one extra mortgage payment a year will shorten the length of the loan, build equity more quickly, and reduce the total amount of interest you’ll pay.