by Kerlain Kate

Created on: October 26, 2009   Last Updated: October 28, 2009

No matter how hard banks issued mortgage loans or how uncertain is the real estate market situation, people desire to live in their own home. When you rent, you are normally limited to what you can do to improve your home. You have to get permission to make certain types of improvements. When you own a home, however, you can do pretty much whatever you want. Here are 5 tips for those who want to buy their first house.

1) Save at least 20% of house value. Then take a fixed-rate loan so that the total amount you need to pay your bank would not change too much. The banks do not care where you get the money from to repay the loan. So if several years after this interest change your payment would not increase considerably. If you avoid taking a financial risk, make sure every month you repay the amount, which does not exceed 35% of your salary.

2) Assess current income. Economic studies showed that the purchase of housing size can be a rather precise indicator of your future income. For example, in choosing the area customers can fairly and accurately assess how much they earn in the future and how much they are able to repay the loan. Also think - do you want a brand new house or a used one?

3) Plan your family circumstances. When you buy a first house even before you have become parents, you will need to re-evaluate your abilities to work and possible future income. The birth of a child is a changing and expensive plan. Even those who do not want to have children, should assess things for a potential surprise. For example, longer-lasting period of unemployment.

4) Calculate additional costs. Don't forget that you need to maintain your house so you will have an additional fees. Financial advisers estimate that the housing repair and maintenance of large parts of the house and the recruitment of professionals can cost about 4% of the initial purchase price a year.

5) Buy the best or the cheapest. If you buy a first house - buy your dream house or the one you can afford. Usually if people can't buy what they want, they buy a little more affordable housing, but close to their financial capacity limit. Financial advisers argue that this is a mistake. A big mortgage will drain your wallet.

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