Money Management Tips for First-Time Homebuyers
Buying
For first-time homebuyers, the prospect of learning to manage money can be difficult. This is especially true because good money management is more critical when you take on a mortgage than it’s ever been before, and getting it right can spell the difference between a major headache and a successful first few years as homeowners.
As such, first-time homebuyers need to develop a series of good money management habits that allow them to enjoy safe, secure, and upwardly mobile finical stability.
4 Smart Money Management Tips for First-Time Homebuyers
Whether you’re in your 20s or your 40s, these four tips apply to anyone stepping into the game of homeownership for the first time:
1. Don’t Spend All of Your Housing Budget
Just because you could afford to bay $3,000 in mortgages and fees every month doesn’t mean you should. If you stretch yourself to the limit of your housing budget, you’re likely to wind up feeling uncomfortable down the road. Instead, see if you can find something that offers you a bit more breathing room. This gives you a safety net when it comes to paying your mortgage and allows you to plan for bigger things in the future.
2. Get Prequalified for a Loan
No matter how much home you can afford, it’s essential to get prequalified for a loan before you start looking for homes. In addition to making the home sales process much easier, this will also allow you to understand exactly what you can expect from your loan and monthly payments, and shop accordingly.
3. Improve Your Credit Score all the Time
Your credit score is a major player when it comes to purchasing a home, and trying to bulldoze your way through a bad one doesn’t help anyone. Instead of ignoring your credit score and hoping it will improve over time, take active steps to improve it on your own. The better your credit score, the more favourable your interest rates will be, and the more attractive you’ll be to lenders.
4. Consider Alternate Loans
While the 30-year fixed-rate mortgage is the go-to for most homebuyers, some financial experts say looking outside those confines can be smart. For instance, if you think you’ll be relocated for work within the next five years, look for a 5/1 adjustable rate mortgage, or something similar. When you shop for the mortgage that fits your lifestyle and goals rather than the one everyone’s looking at, it’s easier to enjoy better financial health and increased peace of mind down the road.
Smart Financial Tips for First-Time Homebuyers
When first-time homebuyers manage their money well, great things happen. While purchasing a home is a big responsibility, these simple tips can help ensure that first-time homebuyers don’t get in over their head and that there’s always a bit of extra in the checking account for a small splurge at the end of the month.
