When you’re a first time property buyer, there’s lots to learn about the home buying process. With the overabundance of information it might be difficult to choose those aspects you must focus on the most – and a mistake but be very costly.
Here are eight things you need to know to make your home buying process a successful one:
Your Credit Score is Incredibly Important
Check out your credit score before making a mortgage application. Whilst checking your score too often can have a negative effect, a rejected mortgage application will be much worse. Find out about your credit score as early on in the process as possible. That way you have time to raise queries and make improvements before applying for your mortgage.
There are Different Mortgages Available
Not all mortgages are the same. Some will allow you to fix your interest rate for a number of years. Others offer a variable rate that will fluctuate over time. You can also sometimes change the number of years over which you wish to pay your mortgage or even seek out a mortgage specifically to let the property you buy. Do some thorough research to find out which mortgage will best suit your situation.
You’ll Need Lots of Documentation
When granting a home loan to a buyer, banks will want to see a whole heap of paperwork. Proof of earnings (usually in the form of payslips), account statements and identification. Depending on how complicated your situation is – for instance if you’re self-employed – you may need to provide further proof of your ability to repay the loan.
Consider More than the Sale Price
Before you sign a deed on a home, you need to understand exactly what you are taking on. Once you’ve bought the house, could you afford to pay for expensive roof repairs, damp proofing or the new kitchen it so desperately needs? Factor in all of the costs (even the costs of moving and insurance) when agreeing on a sale. That way you won’t have any nasty financial surprises further down the line.
Your Needs Might Change
Moving home is expensive and you need to know that the house you choose will be suitable for at least a good few years to come. If you’re currently a carefree couple but may want to start a family one day, think about whether your chosen property offers scope for a baby or two. Equally, if you’re planning to change jobs or get married, these factors should all be considered as you make your property decisions.
Consider the Neighborhood
Spend some time in the neighborhood you want to buy in. Do the neighbors seem friendly? Does it feel safe after dark? Even if having kids seem a long way off, find out about the quality of local schools. And don’t count on an “up-and-coming” neighborhood getting a revamp in the short term. A rundown area may take decades to revitalize and you always run the risk that it won’t change at all.
Plan for an Interest Rate Rise
Whenever you’re buying, whether interest rates are high or low, you need to know what effect an interest increase would have on your mortgage repayments. Stretching your budget to get the house of your dreams is a risk. Work out how much you may end up paying each month and whether it would be affordable. Then build in a buffer to your budget just in case.
It’s Hard Work…But Worth It
Buying a home is one most stressful life events we go through. It’s hard work, with lots to learn and lots of hoops to jump through. But, if you’ve really decided that the world of renting is no longer for you, it will all be worth it in the long run. There’s no greater reward than getting the keys to your new home and having a place to truly call your own.
Searching for and finding a home can be lots of fun. Then comes the hard part. Prepare yourself for the challenging journey to come and keep your eye on the end goal – your very own home.
Michelle Arios is an Assistant Manager, currently writing for BizDb.co.nz – an online business directory. Interested in investing and real estate, Michelle often shares her suggestions with her readers online. Feel free to follow her on @MichelleArios.