Home Buying Buying Home Explained for First Home Buyers

Buying Home Explained for First Home Buyers

by Novruz Gadirzade
Buying your first home

Are you first home buyer? Purchasing a house will most probably be one of the biggest investment a family or a person will ever make in their life. However, the whole process can be daunting for many, leaving them clueless as to where to begin and how to go about the entire process, especially if it is the first time.

On a regular basis I am meeting hundreds of buyers online and offline. This article is written based on practicality and can be applied in different locations (however, I took NSW, Australia as a primary example).

So, wouldn’t you love to get your hands on a step by step guide for a first home buyer? Look no further as we will be sharing in depth knowledge and tips for buying first home on how to kickstart your house buying adventure.

Without further ado, let’s get into the details that every first time home buyer should know.

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Decide What You Want:

The first step in our first home buyers guide involves you narrowing down your ultimate goal. Ask yourself what you are looking for. You want a brand new one, or you can work with a fixer-upper. Is it a home for you to live in, or are you looking for a property as an investment? Will an apartment suit you better or a house?

The answers to these vital questions will allow you to conduct relevant research regarding the type of property and areas you should explore.

Do Some Fieldwork

Once you have decided on the type of property and have some areas in mind, the next step is to do some fieldwork and check if the area suits your needs. You can start by narrowing down the essentials you will need to stay in the chosen area in the long run.

You might be looking at:

  • Access to public transports
  • Schools
  • Hospitals nearby
  • Shopping malls or entertainment centers
  • Parks
  • Easy access to essential roads and routes
  • Peaceful and helpful community

You can explore your most preferred area by taking a stroll in the neighborhood. Visit the local pub or enjoy a nice meal at a cafe to get an idea about how life here will be like. By doing this essential fieldwork, you can get an idea if the location is worth buying your first home there.

Save Up For A House Deposit:

Whether you are buying a two-bed house or a mansion, you will need to save up for a deposit. You can start by determining a budget to get an idea of how much you can contribute every month and calculate how long it will take you to reach the desired goal.

Keep the following pointers in mind when saving up for a deposit:

  • Make sure your goals and budget are realistic.
  • Opening a separate saving account for this purpose will be an excellent way to resist the urge to spend your savings.
  • You must have a good credit score.
  • The bigger your sum of the deposit is, the more money you can loan and that too at lower interest rates.
  • If your deposit is below 20%, you will need to pay the lenders mortgage insurance.

Get A Home Loan Approval:

Before you get too engrossed with the whole process, you must check if you are eligible for getting a home loan. If yes, it will assure you that you are looking at the ideal properties and can act quickly when the time comes as you will not need to save too much.

You must explore different types of loans, such as first time home buyers grant. An excellent example would be First Home Owner Grant (FHOG) for buying a house in Australia.

An excellent way to go about this is by contacting quite a few lenders to have an estimate regarding the amount you can loan. This will give you a realistic idea about what your budget is and what sort of property you can afford. Just make sure you are always in touch with your mortgage broker or lender.

Workout Your Home Loan Options:

You need to understand that all home loans are not the same. Your goal should be to settle on one that suits you best. You must be sure that you will be able to manage the mortgage payments, which ideally speaking, should not be more than 30% of your tax-deducted salary.

So how do you work out your home loan options? Being a first home buyer, you may feel overwhelmed with so many things being thrown your way. Speaking to a lending specialist may help you understand the difference and aid you in pinning down what you need.

Remember to compare loan rates by contacting at least a few separate lenders to get loaning options according to your criteria.

Negotiate When Buying Your House

We know that buying first home of your dreams is exciting; however, it is easy to get run over with emotions and lose track of your budget. Stay grounded to your budget and stay as alert as possible while negotiating or bidding for the house.

You can consider the following options:

1.    Auction:

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Via Domain (Did you know that Paul Wright is a colleague of mine? )

Auction is one of the sale method which can be used while selling property. An experienced real estate agent may decide to use auction depending on circumstances particularly urgency of seller and demand of the market.

If this is your first time buying a house, make sure you observe quite a few auctions to get an understanding of how to go about them. Take an experienced family member or friend along to help with the bidding. You also have the option of recruiting a buyer advocate who can aid with the entire purchasing process. Key things to remember:

  • There is no cooling off period when you purchase property at auction
  • A buyer needs to pay an immediate deposit of the buying price (in practice 10% deposit is required but prior to auction a buyer can get a permission to exchange 5% deposit on the day – ask this to real estate agent)

2.    Privately:

If you choose to buy privately, your sale contract will contain the amount to be deposited and the time frame of when you need to pay it. Many territories and states do have a cooling period. You can mostly free yourself from the contract and get most of your deposit returned by giving written notice.

3.    Contract of sale:

The property’s seller will prepare a contract of sale. Make sure you inspect the property properly and also talk to the seller. Before signing the contract, don’t forget to get assistance from a lawyer while reviewing it. Hiring a legal expert is a foolproof way of avoiding any costly blunders.

Inspect the Building:

Once you have settled on a property, hire a professional to do a pest and building report. They should cover the following:

  • Pest inspection to inspect for termites and other pest related issues.
  • Building inspection tocheck for water and mold growth issues, structural issues, cost of repairs and maintenance and electric issues.

By getting this evaluation done, you could be saving up on a lot of money in the long run.

Making Your Offer:

Once you are satisfied and ready, there are two ways for you to make an offer:

  • Conditional: if specific conditions are met, it takes the form of a binding contract to buy.
  • Unconditional: if you are a hundred percent sure regarding the property and have finance, it becomes a binding contract for you to buy outright.
  • Apply for your loan: Once everything is done and you have landed yourself the property of your dreams, it is time to let your lender know. This way, you can apply to get your loan finalized.

Settling On Your New Property:

Now comes the final part of the ‘settlement’ and when you can move into your new property. What is the settlement, you may wonder?

It is the date when the lovingly picked property is transferred to your name and the mortgage kickstarts. Your lawyer finalizes your settlement between the seller and lender, and then you will be handed the keys to your first-ever home.

The last step is paying the stamp duty within 30 days of the settlement.

Some Key Points To Remember:

Now you know how to buy your first home. However, as a first home buyer, make sure you go through the following key pointers that will help you with the process of buying your desired property:

  • There are a lot more costs involved when purchasing your own home. Make sure to save up enough money for your deposit.
  • Pre-approving your home loan is crucial. Also, remember to stay in constant contact with your broker or lender.
  • Don’t give in to temptation and stay within your budget.
  • Narrow down what is essential and what you can do without before you embark on your house hunt.
  • Once you have settled on a house you like, make sure you get a pest and building inspection done. Also, get the appliances and electricity connections checked.
  • Perform a field trip and visit the neighborhood. Get an idea about how life would be like in that area.

Buying First Home: The Final Thoughts

Buying the house of your dreams, that too for the first time, can be an overwhelming experience, especially when you don’t know where to start from.

With this step by step guide to buying your first home, we hope we have made the entire process easy for you to understand. The trick is to stay within your budget, be consistent with your goals, and take legal help with the formalities to make ‘buying your first home’ experience a smooth one.

If you like the article please review it via the link below so organically it can reach more broader audience and help many more first home buyers.

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