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Sep 08

Preparing to Buy Your First Home: What to Know

Reading Time: 4 mins

There’s a lot of uncertainty and unpredictability in the art of purchasing your first home. This is especially true if you fail to prepare and foresee these challenges, consequently delaying the timeline of your homeownership journey.

That said, with the right preparation, you can acquire a house deed and eventually settle in with less of a headache than you might expect. Below are seven points potential first-time homebuyers should keep in mind as they venture into the housing market.

1. Know Your Non-Negotiables

Picking a home to fit within your budget may entail some compromises. You may have to sacrifice a backyard for a smaller home closer to the city, for instance.

However, you should prepare in advance certain criteria that you and your partner shouldn’t budge on. These could be related to the construction of the house, such as the number of bedrooms, bathrooms, or lawn space. It could also be related to how much you’re willing to spend on the mortgage and house altogether. Ultimately, the choice of what you want in your home is up to you!

By knowing your non-negotiables, you narrow down the number of homes you’ll need to tour before finally calling a lot your own.

2. Decide Where You Want to Live

Where you choose to stay can widen or constrict your opportunities. That’s why it’s important to first ask yourself what factors make an ideal location before considering buying a home.

Do you prefer living in the city or the outskirts? Do you want a smaller town with a close-knit community or a more bustling area with more job prospects? Where you choose to live can also influence your eligibility for concessions or grants. For example, Australians looking to buy in rural and remote regions are eligible for the Regional Home Grant Scheme. For more information, check out Regional Home Guarantee Explained by Joust to get a better understanding of conditions to qualify and eligibility requirements.

 

Your location will determine what kinds of houses are available to you, as well as the quality of schools and other amenities in the area. Weighing your options carefully can help you find the best place to call home.

3. Understand Your Financial Status

Your financial status is one of the most important things to consider when buying a house for the first time. You’ll need to have an idea of how much you can afford to spend on a mortgage, after accounting for other debts and expenses. While the amount you’ve saved up for your home is important, also consider your income, debt, and other expenses tied to the property.

You should also be aware of your credit score and history, as this will impact the interest rate you receive on your loan. If you’re not confident in your financial footing, it may be best to wait a little while longer before buying a home.

Otherwise, start saving up and doing your research so that you can enter the market with confidence!

4. Inspect Your House Before Moving In

You may have found a steal of a deal on your dream home, but don’t let the excitement get ahead of you. It’s important to do a thorough inspection of the property before signing anything.

This means more than just looking at the physical condition of the house. Check for things like mold, pests, water damage, and structural issues that could cause problems down the road. Perhaps the reason why a house is being sold at a lower price is because it needs significant repairs that the previous owner was unwilling to make.

Enlisting the help of a professional inspector can give you peace of mind and ensure that you’re not buying more trouble than what you bargained for.

5. Be Aware of Closing Costs

While the downpayment of the home will take up the majority of your savings, there are other costs to be aware of as well. These are called closing costs and can include things like administrative fees, appraisal fees, and title insurance. Homeowner insurance is another common expense and one that you’ll need to factor into your budget.

Closing costs can range anywhere from a few hundred to a few thousand dollars, so be sure to ask your real estate agent for an estimate. This way, you won’t be caught off guard when it comes time to sign on the dotted line.

6. Obtain Financial Backing

If you’re not working on strengthening your credit score yet, it’s time to start doing so. A high credit score will make it easier for you to apply for a loan with more favorable terms and interest rates. This, on top of the finances you’ve set aside for homeownership, is crucial in securing your mortgage.

If you’re a bit short on finances, several programs are aimed to help first-time buyers fund their first home. A first home buyer’s grant, for example, is a sum of money that the government offers as financial assistance to those who are buying their first home. That said, there are eligibility requirements and a few things you’ll need to go through before securing the funding. Learn more about state opportunities in Homestar Finance’s guide to the first home buyers grant.

 

DisclaimerMoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence 

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