21 Jun 2019

5 Essential Financial Tips Every Homebuyer Should Know

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5 Essential Financial Tips Every Homebuyer Should Know

We’ve mentioned it enough times, but it’s worth repeating. Buying a home is the largest financial investment anyone will make. Financial responsibilities are extremely important when looking at any houses for sale in Sarnia, or Petrolia real estate. Viewing houses, signing on the dotted line and getting keys is just the start of homeownership. So, you have to be ready to take on the financial burden of a house.

There is your mortgage, insurance, repairs, utilities, and supplies needed to own a home. So, before signing on that dotted line and committing financially to a home, you need to be prepared financially for it. And that is a lot more than just having enough money for a downpayment. Again, that’s only the beginning of homeownership. So, if you’re a first-time homebuyer, or someone looking at new houses for sale in Sarnia, here are some essential financial tips to consider.

Tell your money what to do

It’s very easy to become an untamed spender. Budgets are great tools, but these whimsical budgets won’t help you become a homebuyer any time soon. People who are renting or living at home don’t have the same expenses homeowners do. So, they have a lot more flexibility in their spending. It can be easy to think this money will always be there because of the life you live now. However, you need to be thinking of homeownership and what financial responsibilities you will have.

Set a budget where every penny is accounted for and has a purpose. That means setting up automatic transfers of funds into a saving account. This will get you used to allocate a portion of your budget to your homeownership fund. And that will help later on when budgeting becomes a priority. Don’t let your money control you, get control of your money. Once you get used to that money not being in your account anymore, because you’ve moved it to savings, you’ll be comfortable with it not being there in the first place. And you will have saved up a good sum of money.

Watch your credit

Some people may think having no credit cards is a great way to keep a good credit score. You can’t ruin what you don’t have. But you also can’t build it. Lenders like to see potential homebuyers with some healthy credit spending. That’s because it shows they can purchase on credit and repay what is owing later. That sound a lot like a mortgage, but just on a larger level. A credit score is needed to get a mortgage and depending on that score, lenders can offer you different rates. So keep a close watch of your credit score to ensure it’s working for you.

Learn what the right kind of debt is

There are such things as good debt. Student loans, for example, are looked at as an investment in your future. However, if you’re going to be looking at houses for sale in Sarnia, make sure your other debts are paid off or balanced. It’s those high credit card debts that lenders aren’t keen on. If they see you can’t pay off your debts, that may indicate you are frequent overspender.

The problem with that is, as soon as you enter the Petrolia Real Estate market or the Sarnia real estate market, you are going to have debts. It will be tempting to use credit cards to get your way out of a jam. However, if you have a history of this, it won’t look great to a lender. Manage your debt and keep good debts. Student loans and cars are debts lenders are good with seeing. In fact, plenty of people advise that getting a car before a home is helpful. It’s a major financial purchase and shows you can make payments each month. Don’t miss payments and you’ll be a homeowner in no time.

Build a healthy rainy-day budget

Often when first-time homebuyers are looking at houses for sale in Sarnia, all they hear about is having a downpayment. How much should you put down, 5%, 10%, or 20%? The truth is, no matter what you put down, you can’t be tunnel vision on just your downpayment. You need to think about those rainy-days after you buy. That’s because, things do happen, and repairs need to be done. And if you’re used to a landlord covering the costs, you’re in a for a rude awakening when that responsibility falls on you.

So, don’t commit all your funds to a downpayment. As some will say, don’t be house broke after your purchase. It’s smart to have some savings still in your pocket even after your purchase. That’s because you never know when a pipe will break, or a roof will need fixing. If that means you need to save for a little longer before entering the Sarnia real estate or Petrolia real estate markets, then take your time. Save up and be fully prepared to address any problem when you do move in.

Test drive your mortgage

You often hear the stress test financial advisors and mortgage brokers put you through when you are looking for a lender. Can your income meet the needs and demands of homeownership? You don’t need to wait for a mortgage broker to tell you that, as you can figure it out on your own. In fact, it might be a good idea to live under the conditions you would have with a mortgage payment each month. Live with the disposable income you would have after you have already bought one of the houses for sale in Sarnia.

Test driving your mortgage will allow you to plan for the future lifestyle you are going to have. It’s not just the mortgage payment you will have to make. It includes things like insurance and utilities, which could be greater than what you pay for now. So, take your budget for a mortgage test drive and make sure you aren’t leaving yourself house broke. You don’t want to purchase a home and then find out you have no budget for entertainment because your home takes up all your income.

Plan before looking for houses for sale in Sarnia

The lesson here is to plan for the financial demands of homeownership. You can do a lot before you enter the Sarnia real estate or Petrolia real estate market to set yourself up for success. Don’t leave yourself house broke and wondering what you are going to do when a major repair needs to happen. Plan for the future you want to have, and include all the expenses you are going to have as a homeowner, and not the expenses you have to pay today.