What most people don’t realize when buying a home is your kids will grow up and move out and you will grow old. As you grow old, your ability to do simple things such as climbing stairs will diminish. This makes it very important to think long term; you don’t want to be left in a 10 bedroom home all alone when you are 70, do you? The thing is a home is not just four walls that keep you safe, as you live in it, the home becomes part of you.
If you go ahead and buy a home without any forethought, the experience can be very different from what you expected. Think about it, unexpected repairs, problems with the neighbors and lots and lots of bills. The good news is most of these problems can be avoided before you sign anything.
I assume that you already or are close to having enough money to buy a home, that’s why you reading this right?
Buying a home is not something that you wake up and decide I am going to do. It requires careful planning. The first step is to gather enough money to buy what you want, you have a number of options here, one you can save for it which I must admit is impossible for most of us, or two you could get a mortgage.
Can you afford a mortgage?
How sure are you that you will still have your job five years from now? There is no way to know that, a lot of things might happen. In my opinion the fastest way to pay off a mortgage is to put down more than 20% of the purchase price as down payment. The reason for that is very simple, the more you put down the less your monthly payments will have to pay.
If you are paid weekly or bi-weekly, you should consider paying let’s say $500 every two weeks instead of making one payment monthly. Doing that will get you out of debt faster.
The thing you should be most worried about is the interest rate. Mortgage interest rate is affected by a number of things including:
The most important thing here is interest loan type, it is in your best interest to get a fixed interest rate, why? The amount won’t change over time, talk to your lender or financial advisor and find a rate that suits your pocket.
What will the future look like?
Remember where you grew up? It doesn’t look like what it used to look like 20 years ago, right? If you are planning to raise kids or live there forever it is very important to think long term:
The point is, before you buy a home, make sure that you can afford it and you and your family will be safe to live there 10 or twenty years from now.