A common American spends half of his/her wealth in buying their dream house, and it’s considered as the biggest investment of common people across the world. But while buying your dream house, you must do a few things that will help you financially. In this article, I’ll tell you about those who must to do things while buying a house.
4 Must-Do Things While Buying Your Dream House
1. Set a Fixed Budget
Setting a budget is important when buying a house. Most of the buyers in urban areas fail to stick to their budget and end up spending more than they expected in the beginning. While buying a house, you’ll find a lot of houses that you like and the price of those houses are a bit over your budget. But you should always stick to your budget. Those houses may seem attractive in the beginning, but if you think about the future, you’ll face trouble if you go over your budget, especially if you’re investing all your wealth in buying your houseor taking loans to buy the house.
When you buy a house, you’ll have to spend extra bucks on a few things such as utility connections, new service payments, etc. If you go over your budget, you’ll have a hard time paying that extra money. That’s why if you like a house and it’s overpriced compared to your budget, move away from the deal because you’ll find a house that matches your budget and your requirements also.
2. 20% Down Payment
It’s always better to go for a 20% down payment if you can afford it. When you make a 20% down payment, it reduces the financial risk. At the end of the day, you don’t want to pay more than the price of your house. When you pay less than 20%, you may end up paying more than the price of your house. Again, if you pay less than 20% down payment, you’ll have to pay for PMI or Private Mortgage Insurance. As the mortgage ratesare low now, PMI with monthly mortgage rate is less compared to the monthly rental in a few states, but why bother paying PMI.
3. Don’t Spend More than the One-Third of Your Income
Everyone wants to buy a house at a minimum price, but most of us spend more than our income. It’s always better to regret spending less than spending too much on buying your house. You should never spend more than one-third of your income after taxes. For this, calculate your income and minus the tax you’ll have to pay. For this, you can consult with an accountant if you need to. But sometimes you’ll have to spend more when you live in expensive places like NY or San Francisco.
4. Compare Mortgage Lenders
Most of the house owners don’t compare the lenders or banks while taking the mortgage. But it’s important to compare the lenders. It’ll save you money while paying the mortgage fee. Even 1% here and there will save you a lot.
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