MILESTONE 3: Buying Your First Home
MILESTONE 3: BUYING YOUR FIRST HOME
We understand that buying a house is one of the most important financial decisions that you will make in your lifetime. Even those who choose to live with family are likely to invest in property. According to the Malaysia House Price Index, in 2010, the average house price rose to RM 199,636 from Q42009’s RM 188,542, in 4Q2010, Kuala Lumpur record the highest average price level at RM 430,163 followed by Selangor at RM 301,443 and Sarawak at RM 253, 391. Read on and you will see that realizing your dream of having your own house is easier than what you perhaps imagine.
RECOMMENDED FINANCIAL MOVES:
1. Do Not Over-leverage
Property is probably the most important financial decisions that you will make in your lifetime and usually will be the most expensive purchase you would make.
Preparing Yourself for the Buy. It is important to develop a financial plan so that you not only save money for the down payment, but also for other costs that will come along later like the credit check, the mortgage application and the closing (legal fee, valuation fee and stamp duty).
A down payment is generally the money you pay up front toward your new house. Typically, the more cash you pay as a down payment, the less you will have to pay each month on the mortgage, and the lower the interest costs will be over the life of the mortgage. Many people make a down payment of 5, 10 or 20% of the sales price of the house, but the right percentage for you depends on many factors. We advise to borrow up to 80% of your property’s value. There also are certain loans available for down payments of below 5%. One thing that is certain is that saving the money for the down payment can be a challenge.
Once you know the amount of money the bank will lend you, you will need to determine how much will be your monthly pre-payment. Bear in mind that your monthly costs not only consist of mortgage payments, but will also include at a minimum maintenance costs, house owner’s insurance and utilities.
2. Be Cash Smart
Having an established credit history is an important step in a smooth house buying process if you plan to do the purchase by mortgage. Pay your loan on time, limit your debt, reduce the amount of credit cards you have and use them responsibly. It is also important to review your credit report – a record of past and current debt that states when, how and if you paid.
The best approach in buying a house is to gain an understanding of how a house is financed, the process of obtaining financial assistance toward your house ownership dream and the costs that you should be prepared for. There are crucial elements to be aware of: (1) Mortgage Pre-approval, (2) the Down Payment, (3) Mortgage Options and (4) Closing Costs (legal fee, valuation fee and stamp duty) . Financial Planners usually advised to put aside 30% to 40% of the property’s current value to be fully prepared for these cost.
Consider staggering your purchases if you are planning to furnish your new home. Begin by buying the necessities then slowly working towards furnishing the entire place. Some suggestions are to accumulate credit-card rewards points to redeem for household items. Shop at warehouse clearance or perhaps used furniture shop.
“A HOUSE is made of WALLS and BEAMS;
a HOME is built with LOVE and DREAMS.”