Five years to get home

Buying your first home, a five year plan is one option

Buying your first home is not something that you just run out and buy with the milk and the newspaper. This is probably one of the biggest decisions you will make in your life. More often than not there is very little thought put into buying a home and people end up stuck with something that they aren’t happy with and it’s too late to change their minds. The commitment is considerable. What many don’t realize is that there is more to a house than just the price tag. Taxes, transfers, maintenance, upkeep, renovations and interest can all add up and suddenly the picture looks a lot different than you had bargained for.

One way to go about finding your dream home is by giving yourself lots of time, in fact a great deal of time, namely five years.

Here is a five year strategy for buying your first house:

When you have five years to go, you want to be:

  • Calculating if buying is going to make more sense than renting
  • Deciding on where and what you want
  • Creating a detailed savings plan
  • Consider cutting down on debts and try not to borrow money for anything unnecessary

In some cases, buying a home is actually not as cost effective as renting. There are places where the rental prices are very low compared to the property prices, so much so that buying just doesn’t make sense. You also want to decide on the area and what you can afford, taking factors such as commutes, schools, shops, transports etc. into consideration. Think about how your needs might grow and change over time when deciding on the type and size of the house. Finally design a savings plan for your down payment. Ideally this should be at least 20% of the purchase price.

Four years left and you want to be:

  • Checking and correcting any problems in your credit rating
  • Cutting back to save more
  • Continue to be vigilant of your credit rating
  • See if you can live comfortable without constantly taking out short term loans or maxing out your credit card

At this point it is all about making sure that your credit rating is in perfect shape. Correct any problems or errors and concentrate on improving your overall score so that you will be eligible for the best mortgage.

The last three years to two years and you will be:

  • Settle on a chosen area
  • Check your savings and adjust if necessary
  • Consider moving into a rental in the area
  • Begin looking for your house

The most important factor is to take your time and find the right house and the right mortgage. The two have to be compatible and of course you have to be happy with both.

The last year:

  • Start the process of finding a mortgage
  • Carefully calculate all the costs involved
  • Finally make that offer!