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Buying a house is a significant step for anyone to take in their life. Whether you are looking to buy a home by yourself, with your friends, or with your partner, buying a home is always an important step forward. However, just with any other significant step in someone’s life, buying a home is never simple.
These financial tips have been curated to help you take the significant life step of buying a home more easily.
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Start Saving
Starting saving early is important when you are looking to take the next step in your life and buy a property. It is possible to buy a property with a down payment as small as 3%; however, you should save for a down payment of between 10 to 20%.
It is not only the down payment that you will need to save for but also the closing costs and move-in expenses. The closing costs are the fees you will pay in order to finalize your mortgage and are usually between 2 to 5% of your total loan. You will also need to save to pay for moving expenses and any necessary upgrades or repairs.
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Improve Your Credit Rating
As The Money Hub explains, one of the best steps you can take before applying for a mortgage is improving your credit rating. There are many sites that you can use to gain a deeper understanding of your current credit score. For example, you can use Experian, Equifax, or Check My File to learn more about your current credit rating.
Once you have gained a more comprehensive understanding of your credit rating, you will be in the best position possible to improve your score further. This might involve improving your regular payments of bills or even concluding your debts to reduce interest rates.
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Understand What You Can Afford
When it comes to taking the next step in your life and purchasing a house, it is important that you realize what it is you can afford. There are many factors that you will need to take into account when you are trying to calculate how much you can afford to spend on a property. Firstly, it is useful to work out your debt to income ratio. With a debt to income ratio calculator, it is easy to find out what percentage of income you would be spending on your mortgage and how realistic this ratio makes the repayments.
Deciding what type of property you will be able to afford, based on information such as your income, your debt, potential down payment, a credit score is very important. It is useful to also consider how long you plan on living in a property. You should also look at the local area and relevant real estate trends to try to find what type of investment you are making and if you can expect your property to increase its value over the coming years.
