Are You Ready To Buy Your First Home?

Buying your first home and entering that privileged world of property ownership is an exciting step for anyone to take. But you want to do it right the first time round, so here are some tips to get you on your way.

Do you have enough saved up?

The bigger a down payment you can make, the better mortgage rates you will qualify for. While it’s possible to get away with only putting down 5% or not putting down a deposit at all, that’s not the ideal situation. Not only will you have higher rates to pay, but you’ll be in debt for a much longer time. To make things easier for yourself you should preferably be able to put down at least a 25% deposit.

Beyond having a down payment saved up to put down, you should also have an emergency fund stashed somewhere. This added savings should amount to at least three months of your income. It’s a bitter pill to swallow, but if you don’t have enough saved for both a decent down payment and still have an emergency reserve, maybe you should wait and save more first before applying for a loan.

Are you realistic about your financial stability?

The last thing you want to do is spend a fortune trying to pay off your mortgage, only to have to default down the line, or even just struggle along for years with the heavy burden of a loan you can’t comfortably afford. Be serious about your current financial situation. Also, don’t just assume that your paycheck will increase sizably in the future, and therefore buy a home on what you think you will someday be able to afford. You never know how things will turn out.

What can you afford now? Would you still be able to comfortably afford to pay off your loan for the next 15 or 20 years if your salary doesn’t increase as much as you would like it to?

Are you ready to settle down?

Buying a home is a big responsibility, and one you should not commit to if you aren’t sure you’re ready for it. Mobility and flexibility is something you need to think about. For instance, is a dream to spend a year or two abroad still one you cherish? And are you ready to commit to living in a specific area for a very long time still to come? Are you planning on keeping your current employment only for a couple years before moving on, and if so, do you know where you’ll be thereafter? These are the things you need to consider, because once you own a home, you’re going to be rooted for quite some time. While this may be appealing to many, this still might make others chafe.

If you have enough money saved up to put down a sizable deposit and still have a sufficient emergency fund, you’re confident of your current and future financial stability, and ready to stay put and settle down, then start looking around at home loans, because you could soon be on your way to calling yourself a homeowner.