Financially Preparing to Buy a Condo
Wondering how to get prepared to buy a condo, your first home, second or retirement home? In any of these situations, making the right sound financial decisions can make the difference between enjoying your new home to its fullest and begrudging your financial decision. Here are a few guiding tips on how and when buying a new home may be right for you.
Not many individuals can go into a home-buying negotiation and able to make a full cash purchase. If you need to get a mortgage for your new home, understanding your financial position and maximum realistic borrowing capacity before buying is essential to making the right decision. Normally, all you need to understand is your income and essential monthly expenses. There many online mortgage calculators to help you with this decision; look for one like this one that helps you understand the affordability of your buying decision.
This helps you realize that maybe the penthouse is out of reach, but a wonderful 1 or 2 bedroom suite might be a great fit.
Often you realize you may be overspending your disposable income and racking up consumer debt. Most financial planners agree that getting your financial house in order before a big purchase is the best way to ensure you understand all the costs and remain on a stable footing. Draw up a budget for yourself with the new expectations of an amazing condo, to see how your budget will fare in your spacious and elegant new home. You may be able to realize some savings by being close to amenities in the lobby, paying a lower mortgage rate than your current rent or avoid paying for parking with an included parking spot.
Pay Debts, Save a Down payment
Two other very important aspects to your first major life purchase, or the last depending your situation, is to attempt to pay down outstanding debt such as loans or credit cards. These items show up as liabilities against your mortgage capacity and lower it. If these debts do not exist you can easily gain tens of thousands of room in your mortgage capacity by not having any short term debt.
You also of course will need to consider your upfront developer down payments, as a new-build condo fee structure is different than buying a used condo. Some condo developers, such as LJM Developments, have a great structure to down payments that let you spread out payments over the course of the project, allowing you to keep more of your down payment longer.
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