Buying a home can be a daunting process, especially for first-time home buyers. There are many factors to consider and you need to ensure that you are fully prepared for everything that comes along with buying your first property. As a novice, you might feel apprehensive and slightly concerned about all the things you have to get done, however, if you just take it one step at a time, everything should eventually work out in your favor.
Here is a simple home buying guide to help you simplify the process of purchasing your first home.
Before you start searching for a home, take the time to ask yourself the following questions:
How is your financial health?
Before you even consider buying a home, you need to make sure that your finances are in order. Some first-time buyers make the mistake of rushing into a house purchase without checking their long-term financial health.
Do you have enough savings to pay your down payment, insurance and other costs associated with buying a home such as buying new furniture and other items? Calculate all the costs involved and ask yourself if it is financially viable for you to purchase a home right now.
What is your credit score?
This does fall into the category of financial health however, your credit score is such an important aspect of your finances that it deserves its own separate mention. If you plan on buying your home with cash instead of a mortgage then you don’t need to worry about this aspect of your financial health. However, if you want to apply for a mortgage, you would need to make sure that your credit score is good enough to meet the mortgage lender criteria.
If your credit score is lower than it should be, enlist the help of a professional financial advisor or a credit repair specialist to provide you with the tools you need to improve your credit score.
Find Out if you Qualify for a Mortgage
Before you even begin your search, you need to find out if you qualify for a mortgage. The mortgage lender will usually give you a rough idea of how much they can lend you. If you have enough funds to pay a 20% down payment, that will certainly increase your chances of being approved for a mortgage.
What is Your Budget?
Once you are preapproved for a mortgage, you will have an idea how much you can spend on a property. Remember, just because a lender offers you $300,000 it does not mean you have to accept all the cash available to you. If you can comfortably afford the monthly payments then go ahead and sign on the dotted line however, if you know that you cannot comfortably afford the repayments, reduce the amount of money that you accept.
Once you know your budget, you can start searching for a property that fits into your budget.
Where do you want to live?
Do you have an idea of where you want to live? Location is key, it will determine the price and type of property you can afford to purchase. If you want to live in the heart of the city, you should expect to pay more than you would pay if you lived on the outskirts of the city, in the suburbs for example.
Deciding on a location is difficult but you have to ask yourself what do you need most? Do you want convenience? Restaurants and great nightlife? Or, do you prefer a quiet life? Do you have children? If you do have children, you might want to live close to the good schools or close to parks and activity centers.
If you have no idea where you want to live, choose three to four areas and do as much research as you can, spend time in each area, and talk to the locals. Go to the area at night to check the noise levels and various other factors that could affect your decision to purchase.
What type of property do you want?
Do you want an apartment? Would you prefer to live in a gated community or a standalone house? Do you want a townhouse or a bungalow? How many bedrooms do you need? Take all these things into consideration because they will ultimately determine the price of the property.
Searching for a Property
Searching for a property is probably the most tedious part of buying your first home. Will you conduct the search yourself or will you enlist the help of a registered real estate agent instead? Real estate agents can help you find a property that closely matches your requirements, thus saving you the hassle of searching for a property on your own.
When you find a property that you like, consider hiring an expert home inspection team to inspect the property, they will provide you with an extensive report pertaining to the property. This can facilitate the decision-making process and save you money in the long run.
Consider All the Costs Involved
When you buy a home, there are many hidden costs associated with it. Legal fees, tax, and insurance. Aside from the actual cost of the property, there are other costs to consider. Therefore, it is vital that you analyze your finances thoroughly to make sure that you can afford the repayments and the other costs associated with buying a home.
As a first time home buyer, you might be scared of negotiating down, however, if you can save a significant amount of money by offering lower than the asking price. Don’t just accept the asking price as it is, try and negotiate to get a cheaper deal.
Signing on the Dotted Line
Once your offer has been accepted by the seller, your mortgage company will also have to formally approve your loan for that particular property. It will take some time before you get the keys to your new home. However, if all goes well, you should be able to move in soon after your loan has been formally approved. If you are buying outright, the process will be much faster.
Buying a home for the first time is often a challenging yet exciting experience. The process will take time and you will have to exercise patience however, if you take all the things listed in this article into consideration, the process should be much easier for you. Good luck with your new house purchase! Remember, buying a home for the first time might be difficult but it will certainly be worth it in the end.