Are you a first-time homebuyer? Are you looking for some tips before you buy your first home?
You have come to the right place.
For first-time home buyers, our best advice would be to invest.
And, begin with buying a house or an apartment.
To understand this you would require a calculator!
As you will need to compare spending 600 bucks a month in rent over 50 years against owning a palace then that means a savings of over $8 million.
We hope you would have comprehended the ‘MATH’.
TIME is of the ESSENCE for the FIRST-TIME HOMEBUYER
Let’s say you bought an apartment in New York. Regardless if it’s small or big, mark our words, it would be the best investment you’ll ever make.
As there are plenty of tax breaks and that’s the thing we love about the United States. You will get to write off the interest in your mortgage which is even better compared to other countries.
In countries other than the USA you cannot write off the interest in your mortgage.
That’s why a lot of Americans are over-levered which was kind of painful as it led to the infamous 2008 financial crisis.
So, the earlier you can buy the better but you must also keep one thing in mind, to purchase one of the “crappiest” houses in the most excellent neighborhood not vice-versa.
LOCATION MATTERS
You can visit a plethora of property portals to look at the prices of apartments or houses in that area as well.
It’s all relative and you can also get a one-time gift from your parents and if you’re married, your spouse’s parents’ gift will also fall under the label of ‘tax-free’.
But, we would also advise you to seek the expertise of an accountant but it’s one of the best investments you’ll ever make which is owning your place.
Another thing we would advise you to do, to save up enough money is to consider taking it out from your paycheck.
If you can continue doing it straight for two weeks and put that paycheck into your ‘Exchange-Traded Fund’ (if you don’t have enough time to invest in detailed stock research).
As a FIRST-TIME HOMEBUYER BE BOLD, BE RISKY!
Now, we would like to have your undivided attention to this point.
When you buy a house and sign the mortgage then you’re not buying a big enough house or apartment, it has to feel somewhat uncomfortable for some reason.
What we would want you to do is, from this year till 50 years whatever amount you spent on rent $600, or whatever, so today it’s 2022 for now let’s take 30 years which is 2052.
Set the interest rate for 5% and do the net present value. Now, the net present value of what the $600 is worth over time (multiply it by 12) using this interest rate.
When you will do this entire math you will find out that you will be saving an enormous amount of $112,000 in the long run.
So, the sooner you can buy a place the better it is by using the time value of money.
Instead of paying $600 per month, your saving amount will encourage you to further diversify your investments.
SUMMING UP!
For homebuyers, especially if it’s your first time you may need to be extra cautious as buying a house can be a tumultuous and nerve-wracking experience.
But, you also need to understand that buying a house or any property requires being on time. If somehow you lose an edge on time you should abstain from buying rather than making an untimely buying decision.
As, it could adversely affect your interest rates, rents, and net present value.
ALSO READ: What to Know About Home Inspection as a Homebuyer