Congratulations, you have decided to invest in your first house! This is a huge step, especially when winning bidding wars and acquiring financing is more difficult today. Not to mention how the current real estate markets tend to favour sellers over buyers due to low inventory of available properties. Therefore, you need to make sure you are proceeding in the right direction now more than ever.
So before you even think about which prospective house for sale would look perfect with your planned décor, make sure you’ve completed this checklist first.
CHECKLIST FOR FIRST-TIME HOMEBUYERS
Find a real estate agent
Are you experienced in the intricacies involved in the home buying process? Like checking if a property isn’t overvalued, requesting for disclosures and inspection reports, getting an accurate appraisal, and preparing all legal documents and paperwork to get rightful ownership of your newly bought house? If your answer to most of these is no, then it would be to your advantage to work with an estate agent. This will save you a lot of headache and time, since this professional can guide you and make sure everything is done properly and efficiently.
The team at Susan Deacon Property Group has the experience and expertise to guide you through the whole acquisition process, whether you are looking to buy locally or abroad. So if you want to work with a firm that has a good reputation, get in touch with them today.
Fix your finances
Would a lender be confident to give you a loan given your current financial situation? The determinants to this question are: you have a reliable income, you have a good credit status, you have extra savings (to be used for other expenses not related to the home buying process), and you have the cash to make a down payment.
If you are investing with a co-buyer or a spouse, lenders will most likely look at both of your incomes and credit records. As for savings, it is recommended to have at least 3 to 6 months of living expenses set aside so you won’t have to touch mortgage repayment cash in case emergencies arise. As for the down payment, you typically have to prepare 3.5% to 20% of the asking price.
This is a vital step to assess how financially prepared you really are to take on the responsibility of owning a house.
Determine you budget
In addition to setting aside extra savings, you also have to make sure you include your monthly expenditures into the equation, such as living expenses and repayment of other debts. Take into account your current earnings and all things you have to spend on other than mortgage. This way, you can come up with a more realistic number as to how much you can actually afford to spend on a new home. Remember that aside from your loan, you also have to pay for processing fees, packing and relocation services, and so on.
Experts advise to keep the total housing payment under 30% of your gross monthly income. If you go beyond that, you could risk becoming ‘house poor’—living in a big, beautiful home but not having enough left for savings or living expenses.
Apply for financing
When your finances are in order and you have determined your budget, you should then go shopping for a mortgage. Get to know all available options and what type of loan is best for you. Your real estate agent can help you with this as he or she should have an understanding of how each type of financing can affect your monthly expenses and purchasing ability.
Getting pre-approved for a mortgage can give you an advantage in bidding wars. This is because it gives the seller the impression that you are a serious and qualified buyer.
Search for the best property
Accomplishing the above steps will help in narrowing down your category for the perfect home. Aside from getting the assistance of a professional estate agent and working out your numbers, you should also determine what sort of neighbourhood is ideal for your lifestyle and needs. Should it be near your workplace? Do you want a peaceful and more laid-back area? Or is it vital to be located in the vibrant city business district? Also, what type of house is suitable for you? Are you moving in with your kids, pet, or other family members? Identifying these factors makes the search process quicker and more efficient.
WORK WITH EXPERTS
Buying your first home is a process that should be planned and executed properly. Or else, you risk losing a lot of hard-earned money and suffering the headache of running after mortgage repayments you can no longer afford. Working with the right experts will give you the professional guidance required to ensure you are making the right decision from day one.
Here at My Chronicles, we want to make sure you find the right specialist to work with, whether you are selling, buying, renovating, or building your own home. So make sure to check our reviews and guides.