There are so many factors that go into consideration before purchasing a home. From mortgages to home equity and so much more, the journey to becoming a homeowner can seem strange and daunting, even with the help of a real estate agent.
Nevertheless, some important skills you need to learn can make the whole process smooth and easy to manage. Ever wondered what skills are needed when it comes to owning a home? Here are four skills that should be developed before owning your home:
Your home purchase can cost you a pretty penny, from the purchase to furnishing the home or simply maintenance. This is why budgeting should be the first skill that must be mastered.
The basic rule of budgeting is that your monthly mortgage payments must not exceed 25 % of your disposable income. With this rule, you need to combine all sources of your income, deduct necessary expenses, and cut down on spending to give more to your home-buying budget.
Lenders might sometimes offer you a loan agreement that is above what you can comfortably afford, to avoid financial strains, you need to set a price range for your future home and stick to it.
Also, when budgeting for a home, you must thoroughly research. Find out the communities that offer the most affordable housing within your budget. You can employ the services of a real estate agent to easily access all potential options.
You can also consider properties below your budgeted price range to give you extra bidding room.
Understanding mortgage basics
A mortgage is a loan backed by your home’s equity that assists in the purchase or refinancing of your home. Understanding your mortgage, how it works, and how to get the best deals is an important skill to have before you become a homeowner.
There are three parts to a mortgage; the fees, the down payment, and the monthly payment.
The fees are the various funds you pay upfront in order to get the loan while the down payment is the money you pay upfront to secure your mortgage.
The more money you’re willing to pay as a down payment, the better your financing deal will be. If you pay a huge down payment, you’ll end up with a lower mortgage interest rate, pay fewer fees and gain equity in your home faster.
The monthly payment is the amount you will need to pay off your mortgage over the length of the loan and includes a payment on the principal of the loan as well as interest. Oftentimes, property taxes and other fees are also included in your monthly bill.
There are two main types of mortgages. There is the conventional loan which is guaranteed by a private lender, for instance; loanDepot’s mortgages. And, there are also banking institutions and government-backed loans.
After choosing your loan, you’ll need to decide whether you want a fixed rate or an adjustable rate. The rate you choose determines the amount of interest you’d be charged.
A fixed-rate mortgage requires that your monthly payment is the same amount throughout the time of the loan. When your loan papers are signed, you agree on an interest rate that doesn’t change. This is the better option to choose if interest rates are low when you get a mortgage.
An adjustable-rate mortgage, on the other hand, allows a varying interest on your loan with prevailing interest rates. When the rates are high, your monthly payment and mortgage will go up. If the rates go down, your mortgage rate and monthly payments would drop too.
All homes go through their usual wear and tear but it’s usually easier to maintain a rented apartment.
Maintaining rented apartments usually includes calling the landlord or a repairman, and these repairs are usually covered in the rent. This is not the case for a homeowner. As a homeowner, the duties and responsibilities of maintaining and keeping your home fall on you.
Whether an expensive issue or a small one, rather than calling a repairman for the smallest of faults, you can learn to do it yourself. This means you can fix things quickly while spending little or no money on repairs.
These maintenance skills include; switching out a bad bulb, hanging things on the wall, beginner plumbing, cleaning the air conditioner, and more.
Note that in a bid to save more money on maintenance, you should not jeopardize the integrity of your home’s maintenance. If it is not an easy fix, don’t hesitate to call the repair man or the plumber.
Understanding home insurance
Home insurance or homeowners insurance is a type of property insurance that covers damages and losses to a person’s home along with the assets in the home.
It also protects and provides liability coverage against accidents in the house or on the property. And depending on whatever policy, the insurance can also protect anything built on your property, this covers storage facilities, equipment, and others.
With homeowners insurance, most of your property is protected from natural disasters, fires, and other natural disasters. It has more thorough coverage and a higher limit cap than renters insurance.
A home insurance policy tends to cover four kinds of incidents on your insured property. They are interior damage, exterior damage, loss or damage of personal assets or belongings, and any injury which occurred while on the property. When you make a claim on any of these incidents, you will be required to pay a deductible.
Homeowners’ insurance should not be confused with mortgage insurance or home warranty. A home warranty is a service contract that usually lasts for a year. It helps pay for the repair and cost of replacement when parts of the covered system and appliance stop working.
While mortgage insurance is an insurance policy that covers and protects the mortgage lender if the borrower defaults to pay, passes away, or can’t meet the contractual obligations of the mortgage.