One of the biggest achievements in your life is to own a house that you can call yours. Although there have been an increase in homeownership in the past years, there continues to be a lack of preparation that leads to financial problems in the future.
Many first-time homebuyers try to speed through the process by closing the deal as soon as they get the approval from the mortgage company. Or, they receive a preapproval for a mortgage and then begin shopping around for the higher end houses – way beyond their budget. Expenses from owning a house can and will add up. Prepare for house maintenance costs, monthly mortgage payments, and utility prices. Also, an emergency fund isn’t necessary but is recommended as the unexpected “accidents” do occur.
Low Credit Score
Having a low credit score has more impact on your finances than you might think it does. The lower your credit score, the higher the interest rate on your mortgage will be. If you’re looking into a 30-year mortgage with a low credit score, be prepared to see an interest rate on the higher end – which in turn will add hundreds more to your monthly payments.
An emergency fund, as stated above, isn’t mandatory but is highly recommended. Damages and accidents are bound to happen to everyone at some point in their lives. Keep in mind though that maintaining a secure emergency fund will relieve loads of pressure and stress off you when worse comes to worse.