Dodging The Financial Pitfalls Of Buying A First Home

Young-Couple-Buying-Home-Header

For a young a couple, buying a first home can seem like an impossible financial burden. You need to think about mortgages, repayments, bills and tax. It may make some potential young buyers dismiss the idea completely. But, you shouldn’t do that because buying your house is a big part of life. Being able to afford to do this is a tremendous achievement, and it should not be disregarded too quickly. Instead, you should look forward to making your new house a home. Of course, first you have to buy it, and there are a few pitfalls you want to avoid.

Getting Gouged On Price

Once people were able to research everything online, this problem should have disappeared. But it hasn’t, and young home buyers are still being gouged on price. They are being taken for a ride because sellers know they don’t understand how much a house should be. You can avoid this by making sure you are overly familiar with the property market. You should know exactly how much houses are selling for and what type of price you should be expected to pay. You should never find yourself in a position where you are unsure whether the asking price is fair.

Taking A Bad Credit Loan

If you have a poor credit rating, you may have heard that you can still buy a house. While this is technically true, it’s not advisable. Companies offering bad credit loans know their customers are desperate. For this reason, they charge ridiculous prices and offer deals with huge interest rates. Before you know it, the repayments will have grown exceptionally high, and you won’t be able to pay them back.

A wiser move is to instead fix your credit rating before you start considering purchasing property. You can do this by getting your bills in order and crossing off debts that have built up on credit cards.

mortgage-tax

Not Understanding Different Mortgages

When you start to think about buying a home, you should be looking at the different types of mortgages to find out which one is right for you. An adjustable rate mortgage has a fixed interest for a short period, which is beneficial if you think you won’t be staying there for a long period. But, generally speaking, first time home buyers are looking for a place to start a family. That’s why they often look at FHA approved loans. These are sometimes considered the best first time home buyer loans on offer because they are insured by the government. They are also easy for the first time home buyer to afford.

Not Knowing Deposits Are Complex

Lastly, many people simplify paying a deposit on a house. For instance, many say you should aim to pay over five percent of the asking price upfront. But, if you take an FHA approved loan, it can be a lot less than that. Also, if your deposit is more than twenty-five percent of your annual income you need to explain where this money came from with a letter. If it was a gift the person giving it needs to explain their reason as well as if they can afford it. It’s not as clear cut as people believe but once you understand the fine print you will find buying a house is possible for someone like you.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>