Buying a new home is an exciting and challenging time. Through following some simple steps, you should be able to take away some of the stress or anxiety of making the purchase. We have compiled a list of a few dos and don'ts to help you on your exciting adventure.
Things to Do
There are many steps to buying a home, and we have listed a few of the crucial areas you should be paying attention to when purchasing your home.
Create a Good Impression
The first step you should take when you have decided to buy a home is to create a sound financial history. Showing lenders and brokers that you have control over your finances will make the process smoother and ensure you get the best possible interest rates available. Check your credit report online to make sure you have no outstanding issues with unpaid loans or store cards. Keeping a detailed history of your finances for the previous five years, showing a salary coming in and what has been paid out, will give the lender confidence that you can meet the repayments.
Work out What You Can Borrow
Before approaching a lender to seek a loan, you should take care to work out how much you want to borrow. Use a home loan repayments calculator online to determine how much you should borrow. You can change the parameters to increase the deposit amount or shorten the length of the loan, and this will show you some of the options available when searching for a mortgage. Always keep a six-month reserve of money when buying a home as there will still be a few unexpected bills that will need to be paid.
Decide What Property to Buy
An important point when house hunting is not to get carried away and buy a house which either cripples you financially or is impractical as a home. You are the one with the money in the bank so never feel pressured into closing a deal quickly; the right deal will come along. For young home buyers, looking at small apartments may be an excellent route to get your foot on the property ladder. If looking for a small house, you should take care and make sure you get a thorough home inspection and have a clear idea of what the utility bills and taxes will be.
Things Not to Do
The list for what not to do can be extensive, but we have put together a few areas you should be aware of before going ahead with your house purchase.
Don’t Run Up Debt
It may seem obvious to not get into debt before getting a home loan, but many still do it. Any debt you have when asking for a loan will be considered and can lead to you missing out on a loan or having to pay higher rates and, possibly, mortgage insurance. Be sure to clear any outstanding store cards and all credit cards before seeking a loan. If you have a plan to buy a new car or other considerable expense, waiting until you have secured your home loan is advisable. The importance of clearing debt before seeking a home loan is highly important as this may determine your repayments for the next five years.
Don’t Go It Alone
With the world at our fingertips online, it’s easy to feel you have all the knowledge regarding buying a home. Many experienced property investors will still seek out advice from real estate agents, lenders, and homeowners to make sure they have the best deal in place. When buying a home, you should look to soak up all the advice that is offered. When talking to any brokers or estate agents try and ask as many questions as you can, they will be happy to help. Most states provide advice online for homebuyers which will give you information on locations, how to get a mortgage, and any fees you will need to be aware of. First-time buyers may find details on benefit schemes designed to help you buy your first property.
Don’t Change Jobs
When talking to a lender, they will want to see a pattern of financial stability and a regular income, to make sure you can meet the repayments. Making changes to your situation may delay an application for a loan or mean higher rates. Changing jobs for a higher salary is good but doing this just before applying for a loan means you will be less appealing for mortgage lenders. If you need to change jobs at this crucial time, try and get a letter from your new employer detailing your future salary as this will help show stability and credibility to your application.
Buying property is not hard to do, it is a big commitment though and time should be spent preparing before talking to a lender. Take the same level of care when gathering your financial history as you would when compiling your curriculum vitae, banks want as much information on hand as possible. Never get rushed into buying a house, the right deal for you will be there, and you don’t want to buy a home that doesn’t suit your needs. Seek advice from homeowners you know, and they will be able to save you lots of time and advise on where to look for with loans. Buying a home should be a fun moment so take your time and have fun house hunting.