Buying a house is one of the projects that many people consider as part of their strategy to create wealth. The steps to reach that goal can be a bit intimidating as there are many factors to consider before making such a significant investment.
To start looking for a home, it is essential that you make a real analysis of your financial situation and your current and future needs and objectives. And in this process there are questions that you must answer precisely:
Do you have a stable job? How much do you earn? Will you buy the house by yourself or with someone else? What type of home are you looking for? What credits do you have access to? What is your budget? Do you have enough savings to pay the down payment on a house?
Where to start?
Income and expenses.Analyze your current income and expenses; you must make a brutally honest calculation of what you earn and what you spend. This will allow you to determine how much debt you can take on to pay off a mortgage and the additional expenses that come with it. Start by identifying all your income, including salary, pensions, rents, etc… any income you have on a regular basis. Next, you must make a detailed breakdown of all your expenses, such as payment of services, transportation, food, insurance, cards or other types of credits; Any debt that you have to pay must be included in your budget so that your calculation of available resources for the mortgage payment is as close as possible to reality. For your calculations to be more accurate,
Savings goals. As we have mentioned before, a mortgage loan does not provide 100% of the cost of a home, so you must be prepared to directly pay the down payment and additional expenses such as appraisals, taxes, deeds and notary fees and to be able to do so, you need draw on your savings. If at this time you do not have the necessary amount, we recommend that you set the amount of savings and the term to reach it. By being clear about the amount you can make adjustments in your budget to achieve that goal; You probably have to make cuts in your current expenses to achieve this, but if you want to invest in a property, you should know that you will have to make some concessions, such as eliminating the cost of daily coffee or canceling a platform ofstreaming . Be careful: the savings destined to buy your house must be differentiated from your emergency fund.
Credit simulators. If you already have your budget clear, the next step is to determine how much is the amount of credit that a financial institution can grant you. To do this, you can use the credit simulators offered by banks, which, based on the data you provide, will give you an idea of the amount they can lend you to buy a home, the interest rate, the terms and the amount of monthly installments. By knowing the estimated amount of credit that you can obtain, you will be able to focus your search on those homes that meet your needs and that at the same time are within your payment possibilities, without compromising your financial health.
Extra expenses. We would like the mortgage credit to take care of all the expenses that the purchase of a home entails, but this is not the case, so when budgeting what you can allocate to the purchase of a house you must consider the payments that are outside the mortgage . In addition to the aforementioned appraisals, taxes, deeds and fees, you must also consider the adjustments required by the property, for example, you may need to raise the perimeter fence for security reasons, install heating or include a full kitchen… All that work or extra equipment that the house requires, must be considered in the expenses that will not be covered with your credit.
Analyze your options. Choosing a mortgage loan is a decision that you must make in an informed manner, so do not rush with the first offer they make you. It is important that you analyze the conditions that each financial institution grants you to ensure that you choose the option that best suits your needs and budgets. Ask all the questions you need to clarify all your doubts and do not make assumptions, it is preferable to take the process slowly than to launch into a loan without fully knowing all itsauses.