Continue reading to learn how to work toward affording your dream home.
Figure Out Your Budget
While owning a dream house is a worthy goal to shoot for, you must also be realistic about what you can afford. Ideally, you should calculate how much your monthly payments would be on a 15-year fix-rate mortgage and try to ensure that it’s not more than 25 percent of your yearly salary.
Try to avoid 30-year mortgages, as the interest can be more of a financial hassle than it’s worth.
In addition to mortgage payments, you’ll also need to account for routine expenses, such as HOA fees, property taxes, and utilities. Keep in mind that if you’ve been renting before now, all repairs and renovations are now on your dime as well.
If you want to buy a fixer-upper or have dreams of changing rooms or making additions, you’ll need to be able to afford those changes as well.
Start Building Up Your Credit
Your credit score plays a significant role in whether lenders are willing to give you a home loan. The higher your score, the better your chances. Understanding the essential factors that impact your credit can help you boost your score even at an early age.
The most important thing you can do to help build your score is to make sure you make every payment on time. When your payment history is stellar, it also looks excellent to potential lenders, who know that they can trust you to make your mortgage payments every month.
Save Up for a Significant Down Payment
The best way to ensure affordable monthly payments is to put down as much money as possible when purchasing a new house. As a general rule, you should start with at least 20 percent of the total sum.
To ensure you’re saving enough, you may need to make some lifestyle changes, such as skipping discretionary costs like eating out or going to the movies.
Pick Out Some Different Options
Once you’ve got a solid idea of your financial situation, you can start to look at the type of homes you want to live in. Create a list of must-have features you want in a home, the location you want to live in, and amenities in the surrounding neighborhood you’d like to have available to you.
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You can use sites like Zillow or talk to a real estate agent (if you’re close to buying a property) to start narrowing down your choices.
Understanding how to work toward affording your dream house can put you a step ahead of your peers. You’re never too young to start planning your financial future. In fact, the earlier you start, the more likely you are to find success.
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