Buying a Home for the First Time Buying a home could be the biggest single purchase you can ever make, so it’s important to be familiar with the numbers before signing any contract.If you’re prepared to take the leap and get your first home, below are seven tips you should consider: Your Budget This may sound basic, but underestimating the real costs of ownership is a usual mistake. Not only do you have a mortgage, you’ll also have to pay taxes, insurance, and other expenses that accompany having a home.Currently, a down payment will be around 20% of the purchase price.
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Your credit score has an important role to play in obtaining low-interest financing.Look at your credit report and work out discrepancies before you meet with a lender. Keeping It Small Building up new debt prior to home financing can influence your debt-to-income ratio and the amount you can borrow from a lender.Hence, don’t buy a car or any big-ticket item on credit if you have plans of buying a home in the near future. Doing Your Homework Save cash and time by shopping around–there are loads of websites that offer help with this– to find out which lenders are offering the lowest interest rates in your area.Comparison-shopping helps you save cash as well as time in the long run, and if you’re talking about a three-decade mortgage, that’s going to be a rather long run. Emergency Savings Many a dream house is now a money pit, costing the homeowner way beyond what’s budgeted.What’s the picture if your street is flooded or your plumbing requires an overhaul?Before buying a house, hire a reliable home inspector, and be ready for the unexpected with cash set aside for the unanticipated. Energy Tax Credits To enjoy energy tax credits, qualify energy-efficient equipment in your home.More than a third of solar and geothermal installation costs are claimable on your taxes, meaning you get to pocket some savings. Renovations Though you generally can’t take home improvements on your annual tax return, the good news is that these expenses can help when you decide to sell your home.Just include them in your adjusted cost basis: the bigger the basis, the lower your capital gain.In order to qualify as a deduction, the renovation must increase your home’s material value, stretch your home’s useful life significantly, or add new uses to your home.In computing capital gains, you can also exclude up to a maximum of $250,000 of the gain from the sale or $500,000 if you’re filing jointly. A home can help you build a future worth looking forward to, or break your bank.Don’t buy into the dream without running the numbers.