If you are a first time home buyer, you may have a lot to learn. Working from a blank slate, you must build an understanding of the housing market, determine what you can afford, secure a loan and hone in on a home that's a good fit for your lifestyle. The transaction will likely become your largest asset ever so there's little room for error.
It is a daunting task, but you can ease your concerns if you take the process step-by-step, watching your footing as you move along the path towards owning your own home. Below is a list of 'Do's and Don'ts' to help you turn that stress into the self-confidence you'll need to move closer to your first home. The list focuses on areas first-timers typically stumble over in their initial home-buying attempt. Knowing what you could face will help you avoid some of those trip-ups.
DO examine your credit standing. You need to know your credit standing. You may need to request corrections if there are errors. You may need to adjust your habits if your credit behaviour is less than sterling. And you need to take those steps before seeking a loan. Most estate agencies will perform this check for a nominal fee.
DO explore a bond pre-approval or commitment. An early green light on a loan will put you in a good negotiating position when you find your dream home. It will also help you stay within your budget.
DO line up a dream team of professionals. You may need a real estate agent, an attorney, a bond originator, a home inspector and others to be your professional eyes during your home search.
DO buy for your lifestyle. Your first home may not be your last, so anticipate how long you'll live in your home and buy based on your plans for the duration. Raising kids, starting a business, taking on a new job, housing Granny etc, could all impact the size or type of home you need.
DO heed housing priorities. Separate your wants from your needs so you know where you can compromise to stay on budget.
DON'T get taken by the first house or neighbourhood you see. Keep an open mind and spend sufficient time finding the right fit in a house and neighbourhood for your needs.
DON'T buy more than you can afford. Lenders may offer you as much as your financial condition warrants, but that may not be what you can comfortably afford. It's better to live with a comfortable bond repayment on a smaller home than to struggle every month paying a bond on a house with more room than you really need. The deposit, transfer and bond registration costs, monthly expenses and rates & taxes must be within your income and savings range.
DON'T treat your home like a stock portfolio. Homes appreciate and depreciate in cycles which often aren't predictable. Don't expect your home's value to skyrocket. Buy a home because you need a roof over your head, not for a quick profit.
DON'T try to time the market. Pinpointing the bottom of the market always happens after the market has started to turn up. How, otherwise, can you see the bottom? Focus on personal lifestyle needs, not market trends, in terms of timing your home purchase.
DON'T sign for a confusing mortgage. Shop around for the best loan, read every detail of your loan contract and get some help understanding terms and provisions that confuse you. Avoid exotic, 'creative financing' multi-option loans you don't understand. Again, lifestyle is key. Get a loan that fits.
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