The home is where the heart is. This quote from Pliny the Elder is as popular as the desire for each family to have their own house. To have a house which you have the liberty of painting and renovating, not to mention a spacious yard where you can plant beautiful flowers and where your children can romp around all day makes the desire to be even greater. Having your own house, is not only a good investment, but could give you and your family a lot of savings and benefits. However, there are various things that need to be considered when you are planning to buy your first home.
With the news about the economy remaining gloomy and where prices are rapidly rising, it is wise to consider all the aspects of buying a house. You also need to ask relevant questions to foresee possible problems in the event of purchasing your first home to save you further headaches.

Questions to Ask When Buying your First Home

Questions give us headaches, but they also help us analyse a certain situation clearly and completely. By asking the appropriate questions, we could zero in on what is really essential and easily scrap the unnecessary.

• Am I better off renting or buying? Together with this question are the follow-up questions: Are rents cheaper than homes in the city where you live? Are you living in the city where you want to live for good, or you are planning to move in a couple of years? Is your job secure enough to pay the mortgage? When the answers to the above questions are negative, then you might scrap the idea of buying a house. Experts would tell you that with the unstable economy, investing in a house is not as good an option as it was 10 years ago.
• How much do I really need to buy a house? Determine what you can afford. Have you saved enough money for a down payment? Logically, the higher the down payment the lower the monthly mortgage is and in turn the lower your repayments are. However, mortgage lenders nowadays typically require at least a 10% down payment of the home’s total value, and 20% if you want to avoid the added cost of lender’s mortgage insurance. To accurately know how much you really need to buy a house, get yourself pre-approved for a loan. It will also help you speed up the process of getting the house when you get yourself approved. In addition, you should also consider the extra costs that will be incurred by legal fees and title charges that could amount to an extra 5% of the house price.
• How much can I borrow? This is a very crucial step for you to make before you even consider buying your first home. Remember that a good credit standing can help you get your dream house. Be sure that you are able to find a mortgage lender who can provide you with a home loan at very affordable rates. Although you can secure a home loan from banks, some of these financial institutions require a life insurance policy as one of their criteria to approve the loan. If you have life insurance, it gives the bank some kind of assurance that you or your family will still be able to pay the mortgage even in the event of your death.

Additional Tips when Buying Your First Home

After asking some necessary questions before buying your first home, try to hear what the experts are saying about buying a house. Their advice would help you see other facets or loopholes in your decision that could further clarify other questions and doubts you have. Below are additional tips for first-time home buyers.

• Have a realistic look at the costs. The planning and questioning does not stop at whether you can afford to pay the down payment or not. You should also make sure that the house you are buying will not consume your monthly income in expenses such as maintenance, insurance, real estate taxes and rates. Make sure that after buying your first home, you still have enough money left in your bank account for ongoing costs and maintenance.
• Ask for the help of an expert. A planner can help you calculate how much deposit you need and how much you can borrow. He can also help you review your will and recommend and organise appropriate insurances.
• Know important mortgage basics. Mortgages are big financial investments that require economic stability and commitment. It is important then to make yourself familiar the various types of mortgages and their rates.
• Strike a bargain. Don’t ever think that the real estate broker is your friend out to give you a good buy. Real estate agents only quote comparable prices of the same house in the same neighbourhood. Consider the price between buying land and building the same structure as opposed to buying both the house and the land to get an idea of whether a property is priced at its true value.
• Have a life insurance policy. Although you are not anticipating doom to happen, it is still wise to have life insurance which will help your family cover the cost of the mortgage in the event of your death. Furthermore, since some banks use life insurance as a criterion for a home loan, so why not get one first.
• Purchase with permanence in mind. Homebuyers who are eager to buy their first home usually make the mistake of buying the house they would eventually want to sell in a couple or more years. But with the economic highs and lows, experts suggest that you should only consider buying a house you intend to occupy for at least seven to ten years.

Ten Things To Consider Before Buying a House

1. Permanence – Can you stay in one place for at least four years? If you can’t commit to remain in one place for that long, you may end up losing money due to the high transaction costs involved in selling and buying.
2. Cash & Credit – Your first step before you actually go house hunting is to make sure your financial side of things is in order. Check your credit history for errors and fix any discrepancy as soon as possible. Buying a house is like a double whammy. You need to be in good credit standing to be qualified for a loan and have cash ready for down payment and closing costs.
3. Affordability – Determine how much you can afford to pay for your house. If you are already struggling for a down payment, then you probably have to set your sights lower or hold off the home-buying plans until later when you are financially ready. You can also use a do it yourself calculator available online to get a rough idea of your current financial situation and how your income, expenses and debts affect what you can afford.
4. Down Payment – Most lenders look at your ability to pay at least 20% down payment. This will hasten their decision to either approve or deny you for a home loan. There may be a variety of lenders around your area who would be willing to grant you a low interest mortgage with low down payment as well. Once again, it will all depend on your credit standing.
5. The Hunt – Location is the key when you are looking for your first home. For people with family, and it doesn’t really matter if you have children, the quality of the school district around the area matters a lot. If you plan on moving in the future and you want to boost your property value, then having a top-notch school district will do it. For homebuyers, it is one of their top priorities. You also have to think of convenience. If it pains you to drive 30 minutes downtown, then you might have to think twice. Another factor to consider when choosing a location is the current status of the real estate market within that area.
6. Team Drafting – With the availability of information online, you have an unprecedented access to information in regards to the property you want to buy and educate yourself on the current market standing. After doing thorough research, you may feel like you are ready to take on the world and do the wheeling and dealing by yourself.
   Although that is very possible, it is not recommended. Why? There are thickets of law within the city, county or streets where the property is located and this information may not be available online. Having a real estate agent that you can trust and who has your best interest at heart will work wonders when it comes to the bidding process.
   Another addition to your team is a mortgage lender. They can help you land a better mortgage rate.
7. Points and rates – The higher your down payment is the lower your interest will be. Points are normally 1% of the purchase price that you are required to pay up front to lower your interest rate. Whereas, rates are the extra percentage the lender charges you and included in your mortgage and determines your monthly payment. When buying a house, try to consider how long will you be staying. If you are staying more than four years, taking points is a better deal and will save you more money in the long run.
8. Pre-approval – Getting pre-approved on a loan is good ammunition for you to determine the price range of houses you should look for. It will save you a whole lot of grief from checking out houses that are way out of your league. This will also put you in a better position to make a serious offer when you finally pick the right house.
9. Do Your Homework – Researching the property and its surrounding areas will give you leverage to determine how much you are willing to pay for the house. Ask for recommendations from your friends, families and your brokers. Knowing more about the property and what you are up against will save you more time and effort and give you a chance to look around and compare houses with similar features that you are looking for.
10. Inspection – It is a given that your lender will conduct inspections to determine if the house is worth the price it is being sold for. Having your own inspector will help you identify potential problems that can occur down the road and will cost a lot of money. You may want the seller to fix the problem before moving in or have it deducted from the final price.

Buying your first home is a big, important step for anybody. It requires a lot of contemplation and an even greater amount of money. So be sure that when you consider buying your first home, you have all the angles covered and enough savings for any expenses it may incur.