First Time Buyers: Three Questions to Answer before You Buy a Home. Preparing to buy a home demands more than just coming up with a down payment. You need to take the time to understand available mortgage options and to balance your debt load. Careful planning and smart budgeting now can help you avoid running into high debt or repayment problems down the road. So before you rush to any Open Houses be sure to answer these three key questions:
- Do I understand the process? It never hurts to meet with a mortgage specialist to learn more about the home buying process and the different mortgage options available – fixed versus variable rate mortgages, flexible repayment schedules, and even mortgages that offer cash back. Before falling in love with a home, consider getting pre-approved so you know what you can afford and avoid getting disappointed by falling in love with a home that is outside your price range.
- What is my personal debt load? If you have other obligations such as a car payment or student loan, ensure you are taking on a mortgage that you can manage within your total budget. Try using an online debt management calculator to help determine how much debt you can reasonably take on based on your income, current debt payments and expenses.
- Can I afford my mortgage and save for the future? Sometimes home buyers take on more debt than they can manage and quickly find themselves “house poor” – with no money left for future savings or a rainy day. Before you take the leap into homeownership, crunch the numbers to ensure your budget reflects the lifestyle you want after you move into your new home, and you are clear on what sacrifices you may need to make to continue to live comfortably and save for your future.