Owning a home is every individual’s dream. However, most people cannot afford to buy a home with savings of their own and need their purchase to be financed by a financial institution. A loan provided by a financial institution to purchase or renovate a home is known as home finance. Purchasing a home offers several advantages. Perhaps the biggest advantage is that it allows you to build home equity when you pay the mortgage each month.
It is a common myth that paying monthly mortgage payments is much more expensive than paying rent. Often mortgage payments may be less than the rent. Unlike rent, which might escalate each year or every few years, mortgage payments are usually fixed throughout their tenure. The interest paid on a mortgage payment is tax deductible. Also, you can take a loan against your home equity at attractive rates of interest and convert it to cash.
With the thought of buying a home, there arise many questions and doubts. The questions that one needs to think about include one’s purchasing power and the monthly payment that can one easily afford towards the home purchase. These are the main criteria that need to be considered. They help one decide the budget for the purchase of a home and narrow down the search to homes that fit in the budget.
You should also consider other initial and ongoing costs. These include a down payment, closing costs, home owners insurance, mortgage insurance, utilities, maintenance and property taxes.
Before beginning the process of looking for a home, you should figure out whether you are able to get home finance and an estimate of what you pre-qualify from a lender. Getting pre-qualified is an indication to the real estate agent that you are a serious and knowledgeable buyer.