For most people buying a home is one of the four or five biggest decisions they make in a lifetime. Most people long to have a place of their own that they can call home and feel secure there. I’m sure you would like to have the freedom to choose how it looks and develops. If it actually belongs to you it is without a doubt, a status symbol. It is a sign of achievement. On a more practical level you want to own something that has value and that can grow in value as the years go by. It is an investment. It is security for your old age, when you can no longer work as well as something to leave your children. When you own something of the value of a house, you can even use it as collateral should a serious emergency arise. Should someone in your family, for instance, need expensive surgery, you could raise a loan on the value of the property to help you over the crisis.
What financial demands will be made of you? Are there any hidden costs that you cannot now foresee? You can approach several Realtors to discover the basic things like interest, taxes and utilities. But there are ‘hidden costs’. You need to find out from family and friends what they are. They mostly involve upkeep and repairs and can amount to quite a substantial sum over the years. Even just cleaning and day to day upkeep can be considerably more than you spent, for instance, in your rented apartment. Most financial arrangements for buying a house involve many years – perhaps thirty – and you have to calculate into your budget how much your family is likely to increase and how stable your income is and whether it will grow over time to keep up with additional expenses.
When you buy a property, unless you are one of the few fortunate ones who can pay cash, you will most likely buy with a home loan, called a mortgage bond. A first time home buyer should usually be prepared to put down a payment of from 3% to 20% of the price. This depends on what kind of loan you get and how good your credit rating is. Occasionally loans are available from some banks to qualifying applicants with no deposit. Your monthly repayments are usually about 0.75% to 1.15% of the purchase price per month. You will also need up to 8% for closing costs, as well as miscellaneous costs. Your realtor should be able to fill you in with these details.
When you are busy calculating whether you can afford to buy your own home, you have probably wondered what would happen if you were unable to make a payment one month. This is a serious consideration and you need to find out what your options are, way beforehand. One of them is loan modification. This needs to be done with the help of an expert, and obviously you need to be sure that only a major crisis, such as losing your job of long standing would require you to take this measure.
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