Buying your first home? Here’s what you need to know.
Simply put, buying your first home can seem intimidating.
Your head starts to spin when you hear friends talking about fixed rate mortgages, insurance, and countering counter offers. You hear reports that the market changes from season to season, making it hard to know how much you should offer and when. Ultimately, you wonder how you’re supposed to know how to make sure you’re getting the most from your investment.
That’s where we come in. When it comes to making important decisions, you need to eliminate as much uncertainty as possible. To do that, you need information.
If you are entering the homebuyers club for the first time, here is a shorthand guide to some of the most important things you need to know about!
Decide what you can afford
The single most important factor to consider when buying a home is what you can afford to pay for it. While some people have enough cash on hand to pay for their homes up front, most choose to apply for a mortgage from a bank or some other lender to cover at least some of the cost of the property. In fact, nearly 90% of all buyers finance their homes, according to the National Association of Realtors.
If you are going to apply for a mortgage from a bank, you need to know the details of your credit history. The relative health of your credit will determine the interest rate you qualify for from the lending institution. Basically, you need to be able to show that you are an attractive candidate for a loan and that your future cash flow situation highlights your ability to repay the loan.
The most common type of mortgage is a 30-year, fixed rate mortgage, which means the interest rate will not change throughout the life of the loan, no matter what happens in the market. You can shop around at various institutions to see what rates they can offer you. Remember that interest rates are dependent on your individual credit situation, so rates advertised online are essentially worthless and may not apply to you.
Decide when to buy
Spring is the most popular time to buy a house because it’s the time sellers flood the market with properties. It also makes logistical sense, because houses that sell in spring typically close in early summer. That means families can neatly tie up the end of the school year and have time to spend the summer moving the clan into the new digs. That being said, fall is also a big time for real estate deals, with sellers looking to move their property before the weather gets cold.
The most important factor in choosing when to buy a house is this: wait until you are financially equipped to make an offer. The last thing you want is to happen upon your dream home, only for someone else to snap it up while you scramble to assemble the paperwork!
Prepare for additional costs
Once you have decided on a house to purchase, you should remember that there will be additional costs involved in your purchase. When you agree a price with your seller, you will spend time doing your due diligence to ensure everything is as it seems in your new home. These are some of the additional costs you can expect to incur:
- Inspection fees – you will pay various experts to inspect all aspects of your home to ensure it is structurally sound and there are no hidden problems with the property.
- Property appraisal – in order for the bank to give you a loan, they will require that the property is appraised to make sure it is worth what you have agreed to pay for it!
- Renovations – even if you’re not buying a fixer upper, you will almost certainly need a budget for making updates and repairs to your new home. Make sure this features in your financial plans!
Close the deal
By the time you get to closing, it can feel like you’ve run a gauntlet of responsibilities and talked to every expert known to man. But you’ll get there. As long as there are no undisclosed problems with your property, your lender will draw up the formal loan application (complete with your appraisal).
Then you’re ready to sign the papers. Your Realtor will go over all elements of the contract, you sign, and you walk out of there with the keys to your new house. Happy days!
Fortune favors the prepared mind – hopefully this information makes you a little bit more ready to make your decisions.
Remember to try to have fun during the process – this is a big decision, but it’s also exciting!
If you need any more information on these or other aspects of buying a house, feel free to get in touch with one of our local experts!