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Our Home Guide…. The
PROCESS OF BUYING A HOUSE
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So it’s finally that time. You’ve been saving every penny you can for years, and you are finally prepared to begin the process of buying your first house. The excitement is through the roof! Now that you have your down payment in order, and are ready to take the plunge…. Where do you start? What actually is the process of buying a house? Let’s take a brief look at the steps involved, and what you should be doing to prepare yourself for the road ahead during your home buying process.
- Get Your Finances In Order.
When it comes to buying a home, it unfortunately isn’t as simple as just having enough of a down payment to make it work. Unless you are going to be purchasing your house outright, you are going to need a mortgage loan. The standard down payment for a mortgage loan in Australia is 20%, however, the actual amount you can qualify for on your mortgage will depend on several factors. These factors will require you to sit down and evaluate your finances to make sure that you can actually afford the type of house you are looking to buy.
The best thing to do aside from saving up for your down payment, is to ensure that your credit is good and your outstanding debts are cleared or minimised. If you own several credit cards, try to reduce the balance owed on them as much as possible. If you have bad credit currently, try to raise your score before applying for a mortgage loan. Having a good credit history will make a world of difference when it comes to your loan approval, interest rates, and the amount you are approved for.
- Acquire Your Home Loan Pre-approval.
It’s difficult to know exactly what your budget is for your new home, if you don’t know first what you are approved for. By contacting your bank or lender, you can get a conditional approval, or pre-approval, that shows exactly how much the bank or lender has approved for you to borrow based on your personal finances. This is where having all of your proof of financial situation in order comes in handy. Based on your down payment amount, personal credit score, and annual income as well as outside obligations, the bank or lender can determine how much they believe you will be able to afford on your mortgage payments monthly. This is how you figure out your general ‘ballpark’ for house shopping.
- Determine What Type Of House You Want.
Take the time to really think over what type of house you want before you enter the market. Are you looking for a townhouse? A standard house? A condo? How much land do you want? What type of architecture is your preferred style? How many bedrooms/bathrooms do you need/want? These are all crucial questions that you should be asking yourself as you begin the search for a new house. These questions are also likely to be asked of you by your real estate agent, and you will save yourself and them a lot of time by having answers already determined.
If you plan on using this house as your home for the foreseeable future, remember that you might want to purchase a house that you can grow into. Even if you are unmarried or without kids now–you might want those things in the future. Consider how big of a house your future self might need, and try to plan ahead in that regard.
- Choose Your Location.
Whether you are buying a house as your first live-in home, or as an investment property, you are still going to want to carefully evaluate the location of the property in general. Simply buying a house that fits your price range is likely going to leave you feeling a bit of ‘buyer’s remorse’ over time. Taking the time to consider the exact location and surrounding area of your property is going to go a long way towards ensuring that you will remain happy with that property for the years to come. In general, a home buyer should consider four things when buying a house:
- Proximity to essentials such as schools, shopping, work, family/friends, etc,.
- Proximity to public transportation.
- Neighbours and overall ‘vibe’ of the neighbourhood, does it mesh well with your personality?
- Future development plans for the area–are there current plans by the city or municipality to develop or improve the infrastructure of the area in the near future?
All of these factors should be considered not only when buying your house, but also when finding your house. If you can hone in on definitive answers for all of these questions, you can help yourself and your realtor to choose the right area for you.
- Contact A Real Estate Agent.
Once you have determined the amount you are pre-approved for; settled on the type of house you are looking for; found your ideal location; then you are ready to begin moving forward in a serious way. While it is possible to buy a house without a real estate agent, it can often feel like an uphill battle. Real estate agents are licensed and experienced in the art of home buying, and know exactly what it takes to get their clients into the homes they are looking for.
Real estate agents have familiarity with the local housing market, ideal times to buy, local taxes and fees needed to buy, etc,. Going through all of the paperwork and ‘heavy lifting’ of buying a house can be a nightmare alone. It’s generally advised to find a trusted and reputable real estate agent to help you along–the commission fees are almost always worth it.
- Final Thoughts.
Summarising the process of buying a house into a few simple steps is admittedly not an accurate representation of the process. However, it is good to have a general idea of how things are going to progress and which steps should be taken in which order. If you are ever in doubt about how to proceed, try reaching out to a local real estate agency; they can help advise you and guide you along the right path. While it may seem like a long road ahead, the final goal of home ownership is what makes it all worth it!