Buying a home is a huge decision and one that could affect the rest of your life. Next to raising a child, your home is the most considerable expense in life and is likely to cost you on average $226,000. This cost could be more with a smaller down payment. In addition, various other fees contribute to the overall cost of owning and living in your own property. While the subject of buying a home is complex, there are some things you can do to lower some costs and ensure you make the best decision.
Check for Non-Standard Construction
One of the first things you should check is whether your home is made from non-standard materials, affecting the mortgage price. Non-standard construction relates to homes made from concrete that have thatched roofs or internal steel frames. A mortgage for a steel framed house, for example, can be challenging to obtain. This is because they require reinforcements, regular maintenance and a complete survey. These increase the premiums available.
Be Aware of Fees and Rates
When you purchase a home, you are required to pay an upfront cost. This is variable and usually ranges from between 7% and 20% of your final price. However, various other fees and rates from lenders and agents can add up to 30% to your overall costs. Additionally, homeownership itself costs around $2,000 per year. This is the cost of maintenance, and experts recommend that you try to save around 3% of your home’s value per year for additional fees.
Consider the Area Rather than the Property
It is very easy to fall in love with a home that you really want. However, as great as a home might be, you should consider the location as much as the property itself. Buying a house in a town or city, you eventually come to hate will ruin your life. So instead, consider the local values, amenities and access to education for children. Public transportation links might also limit your ability to travel for work or school, and neighbours might not be the type you like.
Apply for Assistance
As a first-time buyer, there are grants and financial assistance programs available to you. Each country has their own versions. For example, the United States offers loans to active duty and veteran military personnel and other federal loans for those with poor credit. The UK government provides equity loans and a mortgage guarantee scheme under their Help to Buy initiative launched in 2013. In almost all cases, some form of help is available.
Shop Around for Comparison
A mortgage is essentially a product, and like any product, you should, of course, shop around for the best deal. Get in touch with multiple lenders and ask about the same loan offer with each. You can then note and compare which lender will give you the best rate for your loan. Be sure to note any interest rates, origination fees, mortgage discount points based on your initial upfront payment. Additionally, you should also shop around for agents to lower other costs and expenses.
