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The first thing you need to determine is how much you can afford to spend on your property. One mistake that first time buyers make is to go around looking at properties, finding their dream home, and then realizing that they cannot come even close to affording it. This wastes time and can cause real disappointment.
Instead, use your valuable time wisely by working out how much you can afford. Most lenders will allow you to borrow around three times your annual household income, perhaps a little more in some cases. However, you also need to take into account any debts, as these will impact on the amount you can borrow.
The wisest thing to do is get an idea of how much you can borrow based on income and debt levels by going to a professional. This will allow you get a more accurate idea of how much you can afford to spend on your property, enabling you to look at potential homes that are within your price range. This can save you a great deal of time and disappointment.
Another thing for first time buyers to consider are outgoings that must be worked into the monthly budget. If you have never lived independently before, you may not be aware of how much running a home can cost. You should look into the monthly costs for services such as utilities, and also take into account monthly costs for groceries, car running costs, and other necessary monthly payments. This is in addition to any ongoing commitments you have, such as credit cards, loans, insurance premiums etc.
Other considerations include down payments and money to actually set up your new home. The down payment required will depend on the lender you go through, but there are some good deals available for first time buyers. You can get a deal that allows you to put down just three percent – sometimes less – on your new home. This is a valuable bonus for first time buyers, as they do not have equity to put down in the same way as a buyer that has just sold their old property. You will also need cash to set up your new home, for items such as furniture and to pay for connections such as the Internet, cable etc. if required.
If you decide that you can afford to take out a mortgage, and you are happy with the amount that you can borrow, you then need to determine what type of mortgage you want to take out. You can talk this through with your lender, but you should base it on your income, your expected future income, and your own personal preference. If you are nervous about rising repayments, then you can opt for a fixed rate mortgage. However, if you have the capacity to increase payments should the interest rate rise, you can opt for an adjustable rate mortgage.
http://www.moneyinstructor.com/art/firstmortgage.asp
The Mortgage Maze for First Time Home Buyers
Home ownership is one of the primary goals set by most young families as they embark on the difficult task of creating a new household and raising children. Saving for the down payment is usually a top financial priority in the first few years. Many couples prefer to work and save for a period of time, preferably before their first child is born. Ownership is a sound financial goal. For most young families, it is the biggest purchase they will make in their life time, and careful consideration is required once they have sufficient funds for down payment on a house.
Obtaining a suitable mortgage can be a complex matter, and new home purchasers need to look at the available options before any decisions are made. In the enthusiasm and excitement of finally buying a new home, it is far too easy to make wrong choices. However, it is not so difficult for young couples to educate themselves, and in doing so, they will save themselves a great deal of frustration, time, and money.
By shopping around the many financial institutions that offer mortgages on new or resale homes, mortgage seekers can place themselves in a good position to compare the advantages and drawbacks of different mortgage arrangements. Such things as interest rates, terms available, and the amount of down payment required can make an enormous difference to new buyers. The particular features of different mortgages must be considered and related to the specific needs of the home purchaser.
Long term goals are very relevant to any financial arrangement, but they are particularly so in the case of new mortgages. The terms of a mortgage can range from 5 to 30 years, and home purchasers should select the term that suits, not only their current financial situation, but also the time they intend to occupy the new house. If they are not sure about the most advantageous term and interest rate, they should seek qualified advice.
Advice about mortgage selection is readily available. Banks and other financial institutions are only too pleased to offer assistance, especially if they hope to gain new clients. However, potential clients need to be aware of the sales pitch that might lead them to make hasty decisions. They must remember that they are in the driver’s seat when it comes to final choices.
Many new home buyers today seek mortgage advice on-line, and this can be advantageous is some respects. There is no rush when one is on-line, and the pressure to make decisions can be avoided. Potential mortgage clients must be careful, however, especially when asked to provide information. Credit details should not be given on a web site, unless it is known to be completely legitimate.
An accredited site will need detailed credit information, of course, especially if one wishes to fill out an application. If this is the case, it is important to be accurate regarding credit history and family income. Wrong information will only delay the process, and it may lead to rejection of the application.
Applying for a mortgage need not be a stressful experience if one is well prepared, and it should not be allowed to spoil the experience of becoming a home owner. Purchasing a new home should be an exciting and satisfying event, and being informed about the financial side can only enhance the experience.
http://www.moneyinstructor.com/doc/firsttimemortgage.asp |
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