Owning a home is the dream of everyone. No one is willing to spend their entire life being tenants. You want to have a home where you can spend time with your family without worrying about a landlord knocking on your door each end month. However, this remains a dream for many.
Also, some people buy homes that end up in the hands of auctioneers since they cannot meet their mortgage obligations. You do not want to go the same route. Buying a home should not hurt your financial life. But how can you achieve this objective? Here are four secrets steps on the checklist that covers the whole process of buying a home.
Pay down payments from your savings
One error home buyers make is buying a house on loan. Though it is acceptable, it is a threat to your financial life. Agreeably, it is hard to purchase a house from your savings alone. You will need a mortgage or home loan to fasten the process. However, never rely on loans to pay the down payment of your home.
Also, you need savings to cater for other upfront payments. Before buying a home, you will need to do some inspections and moving costs. Without saving for the downpayment and upfront costs, you will likely hurt your financial health. Therefore you need to determine your down payment in detail.
Do not buy what you can’t afford
Your friends and family are buying homes in the city suburbs. Despite your financial status, you want to follow suit. You can’t live away from your colleagues despite your inability to cater for the same.
If this is your case, you are heading to a debt crisis. Something to keep an extra eye on during the pandemic, as Reuters reports of increasing numbers in personal debt. Living within your means is a gospel everyone willing to succeed needs to adhere to. Never buy a house that you can’t afford to please your peers. In essence, your housing cost should be no more than 30% of your monthly income.
Remember, lenders can offer you a loan, but you understand your financial status better than anyone else. Living beyond your means will only lead to a debt crisis. So, only go for a house that is affordable and in line with your income.
Have an emergency fund
Imagine losing an income while you have a home loan to service. No doubt, this can be disastrous. Also, when you have a home, some emergencies can occur. Your plumbing system can require emergency repair. The roofs can start leaking. The cost of fixing these issues can impact your mortgage repayment and financial health.
The best way to afford to fall into a debt crisis due to such issues is to operate an emergency fund. Have a fund for personal and home emergencies within your budget. This way, you will avoid suffering a financial downfall in case of emergencies.
Insure your property
Do you have an insurance policy covering your properties? While many people insure their cars and other properties, they fail to do the same to their houses. Doing this can be the worst mistake. Having insurance cover for your home will help you handle any financial crisis. Such a cover will help you avoid issues when unforeseen uncertainties happen.
With these aspects, you will prevent yourself from getting into a financial crisis when buying a home.