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Entrepreneur Forum > Entrepreneur - Other Ways to Make Money > Real Estate and Mortgages

Any tips for a first time buyer ?

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Topic: Any tips for a first time buyer ? (Read 388 times)

Galaxian

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Joined: Oct 2007
Posts: 209

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United States

Nov 08, 2007, 06:30:34 PM

My wife and I are about to make the biggest purchase of our lives. We paid off our college student loans and now we both have good credit and are looking to buy our first house.

Can somebody please give me some tips like

a. How much can we afford as far as % of our salaaries
b. Is a fixed mortgage better than a variable rate
c. what is a good interest rate
d. how much money do we need for the down payment
e. how much do property taxes add to your payments
f. do you pay property tax aside from your mortgage
g. can you deduce home mortgage payments on taxes

Sorry for asking so many questions but the mods here are the smartest and most honest of any forum I go on so I trust your advise. I hope Dave or st can answer a few of these for m.

Thanks you

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Code4Gold Superstar

Joined: Jun 2006
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Canada

Nov 08, 2007, 07:38:12 PM

Thanks for your compliment. Yes I can give you some advice from my own experience. I don't have a mortgage for a long time as I paid it off in 1997/1998 & I am really proud to be a homeowner without debt.

It better to put down as much downpayment as you can afford to cut down your mthly payment. I don't really know it is better to lock up your mortgage unless you can predict whether the rate is going up. In Canada, I see that the rate has come down quite a lot. I would say that around 4% is a good rate. When I first came to Canada in 1995 when I bought my 1st house I paid over 6% but the rate had dropped down to around 4% & I don't know the rate at the moment. I guess how much you can borrow, depends on your combined salary.

I still have to pay property tax every year though my house is fully paid for. You have to set aside some money for this tax. This tax has nothing to do with the mortgage, at least in Canada. Dave will be a better person to answer this as he has 2 houses all fully paid for too & he lives in the US.

Good luck to you & it's always best to own a house rather than renting one.

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abubakar

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Joined: May 2007
Posts: 121

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Malaysia

Dec 15, 2007, 06:40:36 AM

st is giving good advice about buying and owning property. Buy what you can afford, pay it off and use the gains you make to move to the next level. There is an old rule of thumb that you by a property that is 5x your current salary. Example, if you make $30K USD per year, you should look at under the $150K range if you are to assume a 30 year mortgage. If you want to do an optimal purchase, buy at 2.5 to 3x your salary and take a 15 year mortgage.

A good down payment will lower your interest rate and if you can afford to put 20-50% down you can lower your payments, save money on the side and pay off yor loan early.

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Vidal

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United States

Feb 12, 2008, 05:42:18 PM

Save and spend every last penny you can scrape up on your down paymnt. After that you need to keep saving until you can pay off your mortgage in full. A paid for house gives you a lot of leverage when dealing with banks for other loans like a business loan.

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