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How Do I Invest For My First Home?
Buying your first home may be too overwhelming. There are
a lot of facts to know about and things to consider before finally making a decision.
And it’s not just any simple decision to make. It’s one that will affect your
life entirely as your home will be your shelter for the rest of your life, or
at least most of it.
Thus, once you have decided that you will be buying a new
home, you have to do your homework. Research on the things you have to know
about buying a house. Learn the ins and outs of the housing market so you will
not be easily fooled by the people you deal with. Remember, these people do
everything for them to earn a lot. They can entice you so much into buying in
an impulse. So it would be better if you have some knowledge about what you’re
getting into.
Other than the research work, the most important thing
you have to consider if you want to buy your first home is where to get the
funds to pay for the house. There are several ways that you can do to start
saving up for your first home.
If you have a Roth IRA account, you can use that to save
for your first home. If you qualify as a first-time home buyer and planning to
purchase a home not less than five years from now, you can avail of the
five-year plan of Roth IRA. This plan allows you to withdraw your earnings
before age 59 ½ without paying any taxes, penalties or charges.
Another way is through personal savings. This has been an
old and tested method of saving for anything. And it requires strict discipline
and commitment. If you are earning a regular salary, you might want to consider
having the bank automatically deduct a certain percentage of your salary once
you receive them and transfer it to your own savings account. This way, you
will not be tempted on spending all your salary and forget about saving. Also,
you should try to avoid making frequent withdrawals with your savings account.
The reason you opened it is so you can save for something that you want, like a
home. As much as possible, try to gain access to your savings account only when
there is sufficient funds to pay for the home you wish to buy.
When you are thinking of buying a new home, try to
determine your target date. If you plan to purchase a house 2 years from now,
or less, then putting your money in more conservative investment tools is the
way to go.
However, if you are not planning to buy until five years
from now or even more, then you can be more aggressive and start investing on
higher yielding investments which tend to perform better over a long period.
Try to also look for some assistance. According to a
survey done by the National Association of Realtors, 23% of first-time home
buyers get their down payments as gifts from relatives or friends. However, if
this is not possible for you, there are banks, charities and local government
institutions that provide assistance to first-time home buyers. There are some
that offer to lend 3% of the purchase price as part of the down payment. This
borrowed money can be paid when the buyer refinances or pays off the loan, or
sells the home.
Also, it is always a good practice to keep your bills
updated to improve your credit rating. Having a good credit report lowers the
interest rate charged on your mortgage. As early as possible, try to clean up
your finances so when the time comes that you will apply for a mortgage, you
won’t have to deal with higher interest rates.
Buying your first home requires a lot of preparation.
This is not a simple investment to make. The decision to buy a home is
something that will affect you for the rest of your life so better be prepared
as early as possible.
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