People in their 20’s and 30’s aren’t supposed to be able to afford a house these days, right? Wrong! You’ve beaten the odds, and you are ready to pull the trigger on your first house. Maybe you’ve been saving for a year for the downpayment. Maybe Mom and Dad have agreed to help cover the first expenses. Maybe you have a sweet job doing what you love. Whatever the reason you’re able to buy a house, it’s a good thing. Owning a home is a great way to build wealth and personal stability. But it’s not without its potential problems. If you’re ready to buy a house, pay attention to the following three tips. They could save you a lot of money and heartache.
- Payment Protection Insurance. Payment protection insurance, or PPI, is a financial product that people either REALLY want, or REALLY don’t want. Let me explain. PPI protects the homebuyer in the event that she loses a job or gets injured, or is in any way suddenly unable to keep up mortgage payments. But it is also an agreement that was sneaked into countless mortgage contracts in the UK, with thousands of people signing up for the (not cheap) policy without realizing they had done so. Today there are many people involved in class action lawsuits to get their money back, because the way PPI was sold to them was fraudulent. This PPI Claims Calculator can show you how much you stand to make if you are one of the unfortunate few who has been given PPI against your will. But then again, if you want it, PPI is actually a perfectly good product for new homebuyers, especially single people or those for whom work is vulnerable.
- Act Now. It’s almost unthinkable that interest rates will be as low as they currently are, at least in the next generation. If it’s important for you to have a home of your own, it is unlikely that the conditions for buying will ever be as favorable as they currently are. So strike while the iron is hot. Save hard, work on your credit score, and try to develop a fairly complex (but responsible) credit history so that when you are ready to buy, you will be seen as someone to whom the bank wishes to lend.
- Always Inspect. If you are buying a home, especially if it has had previous owners, get it thoroughly inspected. I’m talking Radon, pest inspection, top to bottom looks at all systems and construction elements, analysis of the roof, etc. It’s likely that there is some flaw in the house which could 1) be dangerous for you, or 2) be very expensive for you to fix later, especially given the fact that you had nothing with causing the problem. If you catch issues like this before you close, it’s very likely that the current owner will pay to have them fixed free of charge. This is even more likely if the owner is a bank or corporation, not an individual.
There are many other aspects to buying a house, but these are three which could save you money, and which you may not hear much about from other sources.