How Do I Invest For My First Home?

How Do I Invest For My First Home

Purchasing your first home may be too overwhelming. There are a lot of attributes to know about and things to consider before finally making a decision. And it’s not just any straightforward decision to make. It’s one that will influence your life entirely as your first home will be your shelter for the rest of your life, or at least most of it.

Thus, once you have determined that you will be buying a new first home, you have to do your homework. Research the things you have to know about buying a first house. Learn the ins and outs of the housing market so you will not be skillfully fooled by the people you deal with. Remember, these individuals do everything for them to earn a lot. They can attract you so much into buying on an impulse. So it would be better if you have some understanding of what you’re getting into.

Other than the examination work, the most significant 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 methods that you can do to start saving up for your first home.

Preparation to buy a first home

If you have a Roth Individual Retirement Account (IRA) account, you can use that to save for your first home. If you qualify as a first-time home buyer and planning to buy a home not less than five years from now, you can avail of the five-year plan of Roth IRA. This strategy allows you to withdraw your earnings before age 59 ½ without paying any taxes, penalties or charges.

Another way is through individual savings. This has been an old and tested procedure of saving for anything. And it demands strict discipline and commitment. If you are earning a stable salary, you might want to consider having the bank automatically deduct a specific percentage of your salary once you receive them and transfer it to your own savings account. 

With this pathway, you will not be drawn to spending all your salary and forget about saving. Also, you should try to avoid making regular withdrawals with your savings account. The reason you opened it is so you can save for something that you want, like a first home. As much as feasible, try to gain access to your savings account only when there are satisfactory funds to pay for the home you wish to buy.

When you are thinking of buying a new first home, try to choose your target date. If you prepare to purchase a house 2 years from now, or less, then putting your money in more conservative investment tools is the method to go.

Nevertheless, if you are not preparing to buy until five years from now or even more, then you can be more assertive and start investing in higher-yielding investments which tend to perform better over a long period.

Try to also look for some help. According to a survey done by the National Association of Realtors, 23% of first-time first home buyers get their down payments as gifts from relatives or friends. However, if this is not feasible for you, there are banks, charities and local government institutions that provide services to first-time first home buyers. There are some that suggest lending 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 old home.

Also Read: Investment guide – Property Value & market Risk Analyzing

Also, it is always a good practice to maintain your bills updated to improve your credit rating. Having a good credit report reduces the interest rate charged on your mortgage. As early as feasible, try to clean up your finances so that when the time comes that you will apply for a mortgage, you won’t have to negotiate with higher interest rates.

Buying your first home needs a lot of preparation. This is not an easy investment to make. The decision to buy a home is something that will impact you for the rest of your life so better be prepared as early as possible.

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