Once you are ready to settle down in a specific place, whether to start a family or for work, you may be ready to embark on the journey of investing in a property.
Even if you don’t have the intention of living there forever, your property will continue to gain value over the years and should you decide to move one day, you can convert your home into an income producing rental property.
Like most things in life, the secret to becoming a homeowner is to be informed. Educate yourself beyond just the normal factors homebuyers consider like the property features and the neighborhood where you are moving.
Some items to consider are the steps for purchasing a property, the documentation requirements needed for each part of the process, and legal advice for all due diligence and contracts that need to be signed. Be aware of additional expenses, and evaluate your repayment capacity if you are applying for financing to purchase the property.
If before buying a property you’ve only lived as a renter, there are a few aspects you’ll need to keep in mind while transitioning to a homeowner.
These items involve everything from house expenses, and owner’s rights and responsibilities of owning a property.
Your home, your rules
When you’re renting you must follow the rules set by your landlord normally described in the lease agreement. On the contrary, when you’re a homeowner you can decorate any space within your property, as you’d like without worrying about claims or having to bring the property back to its original state. And of course, big renovations are also allowed – it’s your home after all!
Your home, your maintenance
When you are a homeowner keep in mind you are in charge of maintaining all plumbing and electrical systems as well as the all green areas that are part of your property. Hence, it’s very important you perform a full inspection of the property and all of its systems to check if they have been properly maintained over the years. You may still decide to purchase the property should some things need to be changed, however you could us this fact as a negotiation tool to lower the price of expected future expenses.
To help save some money, you could take on simple do it yourself projects within the home like painting and hanging light fixtures. There are simple instructions you can find online including video tutorials by licensed professionals to help you complete the project.
Another concept homeowners must grasp is learning when to let things go…? Knowing whether to repair or replace a problem in your home can help you save money, time, and energy.
Your home, your added monthly costs
You want to live comfortably instead of living just to pay your monthly bills once you have purchased your home. Creating a budget based on your monthly income will help you prepare for the upcoming costs of owning a home.
- Mortgage: also known as the bank loan, is used to assist in purchasing a home. In Panama for example, if you’re a foreigner, you can be lent up to 70% of the purchase price of the property.
- Taxes: this money will be invested by the government in schools, infrastructure, and public services. In Panama, real estate taxes can cost up to 2% of the property’s value – which must be properly recorded in the deed of sale. Some properties have a real estate tax exemption for up to 20 years [Read more about this subject here].
- Insurance: for protecting your investment this insurance is a must. Take into consideration, fire, smoke & water damage, and content insurance among others.
Your home, your neighborhood
It shouldn’t surprise you that homeowners have a much greater financial stake in their neighborhoods than renters. Little by little you’re most likely to expend more time in your community due to a general feeling of stability, a sense of belonging.
Prepare yourself to meet your neighbors, and at the least learn their names and exchange phone numbers for emergency purposes. Remember they are now your allies in the mission to creating a great place to live and a safe community.
Before buying also check building plans for the neighborhood or any other project that might be going on in the future like public roads restoration, parks construction and/or zoning changes. This could give you a bigger picture of whether your investment will gain more value in the future or if changes in the area will suit your lifestyle.
Whether you are becoming a homeowner for your family, or for creating a sense of consistency in your life, it will be worth all the work, time, and money invested. Get down to work and remember buy within your means, home ownership should be a positive adventure, not another stress in your life.