Buying property for the first time can be really daunting, it’s a huge decision and commitment that has the potential to shape the rest of your life. There’s so much to learn, buying agents have their own language, and you just know the bank’s going to ask you a list of questions that you won’t be able to answer. Don’t fret, we have some tips to get you on the road to that white picket fence dream of yours.
Work out your credit
At least 12 months prior to buying a house, or even, 12 months prior to shopping for a house, work out your credit. The first thing a new home buyer needs to know is to get their hands on their credit report and score (and partner’s if applicable) and see where they stand. Your credit will shape your entire home-buying experience, so preparation is key.
When checking your credit report, be sure to look over it, check for errors and check to see if there are any overdue accounts that may have found their way to a debt collector. Anything like this will create a terrible time when you’re applying for a home loan. Your credit needs to be in tip-top shape ideally. Another tip here is to check your credit through a few different agencies, kind of like getting a second doctor’s opinion.
Start thinking budget
Six to eight months out from purchase, have a budget. We hope you’ve already saved a deposit for your home loan by this point, so we mean to have a budget for after the purchase. Work out how much you spend in a week, a fortnight, a month. Look at how much you can keep aside for things like taxes and insurance, and principal and interest. Then consider how much ‘emergency’ money you want to keep stashed away. You need emergency money because once you own, it’s all on you. No landlord means, if you get locked out, you’re paying for the locksmith. You’re now paying for any repairs, any maintenance, and your water bill too.
Remember that banks don’t really care about you. So getting approved for a loan in no way means you can definitely afford to buy a house. Work it out for yourself. Don’t forget about all your other obligations either. Think phone bill, utilities, groceries, other insurances. Do you have kids? Don’t forget about their range of fluctuating expenses. Do they want to play sport? Will you still have the money to enjoy your weekend?
Get your assets in place
Around three to four months out, start thinking about your loan application. Lenders will check over bank statements from within the last sixty days. If you have any plans to deposit into your accounts before then, make sure you do it outside of that two-month window that they’ll be checking. Remember you’ll have to explain all of your financial choices and where money has come from or gone to. Don’t open new accounts, don’t take on loans, don’t take on any debt. Be smart, be frugal, and think wisely about all of your financial decisions from here on out.
Find the right real estate agent for you
Your real estate agent will work closely with you and you want them to work in your best interest. They should be switched on and knowledgeable about real estate, but the area as well. You want an agent that’s highly skilled, communicative, and motivated but make sure you like them too!
Pick the right type of house and neighborhood
It’s an important thing to research, to get informed about any criminal history and local safety, is it handy to shops, pharmacies, hospitals? If you play a sport, is there a club local to you? Research the local schools even if you don’t have children or don’t plan to, schools affect the value of your home so this could influence your decision. Consider things like traffic, or if it’s an industrial area.
Be sure to work out what kind of home you want to live in too. Do you want a nice big house? Is that affordable? What about the maintenance? Maybe you’ve thought about apartments, do you know about homeowner associations and body corporate fees? Maybe you’ll want a dog in the future, would it be plausible?
Most states and countries have a plethora of online tools and apps to check up on neighborhoods. There are websites with online resources and reporting tools where you can enter the address of a home and find its sales, rental history, and a price estimate. This is another useful aspect for making informed decisions and finding the balance between the home you want and the home you can afford.