Buying a home requires a significant financial investment, therefore, it is vital that you take certain essential things into consideration before signing on the dotted line. There are several factors to consider such as your financial situation, location, pricing, insurance and much more.
Here are the top ten things to take into consideration when you are thinking about buying a property. This list will be especially helpful for first time home buyers and people who need additional advice and assistance when purchasing a property.
Right now, you might be thinking about buying a home. However, have you analyzed your finances to check if it is feasible for you to purchase a property right now? Do you have a stable income that will allow you to comfortably afford a home?
Examine your income and your expenditure and also, evaluate the likelihood of you sticking with your current employment. These are all factors that you need to take into consideration before you make the decision to buy a home.
If your finances seem to be in order, you can move on to the next step which is to examine your credit rating. If you have the money to buy a property outright then you don’t really need to worry about this. However, if you need to apply for a mortgage, your credit rating needs to be relatively good before you even think about applying.
You also need to make sure you have the funds for a down payment which is typically between 10 and 20 percent of the property’s value. Although some lenders will allow a smaller down payment or a 100% mortgage, it is best to start with a good down payment before you apply for a mortgage to purchase a home.
To apply for a mortgage, you need a good credit rating, check your credit score and if it is not favourable, you will need to improve your credit rating before you start searching for a home. Some lenders will offer mortgages to applicants with a lower credit rating however, these come with higher interest rates therefore, it is best to improve your credit score before you apply for a mortgage.
Will You Use a Real Estate Agent?
When you are ready to purchase your home, decide how you plan on searching for a home. Will you utilize the services of a professional, registered real estate agent? Or, will you go solo and search for your own property? Using a real estate agent will certainly facilitate the process for first time buyers because they often receive information about properties that are new to the market also, they can often assist you when it comes to negotiating the price of the property.
When it comes to buying property, location is key. Typically, properties that are further away from the city are cheaper, and you tend to get more space and larger properties for your money. However, less convenience and more commute time if you work in the city. If you do have a lower budget, consider getting a property on the outskirts of the city to cut costs and to get more for your money.
If you are torn between several locations, spend time in each location, speak to the locals and to gain an insight into the pros and cons of living in the area. If you have the time and the funds, rent an airbnb in each area for about a week, observe the noise level and general ambience of the area. You can make your decision based on how you felt about each place.
Type of Property
What type of property do you want? A townhouse? A bungalow? Or, would you prefer a condo? If you have a family with children, a townhouse would be a good option for you in an area with good schools and less traffic and noise. Think about the type of property you need based on your individual requirements.
Age of the Home
You also need to think about the age of the property. Are you looking for an older property with old features? Or, would you prefer a brand new property that has never been lived in? Consider the fact that an old property might require some repairs or renovation, you would need to factor these costs into your budget.
Does the Property Need Repairs?
As stated above, if the property needs repairs, you would need to consider this, you can also use this to your advantage by negotiating down. An old property would require a thorough home inspection by a professional home inspection company.
They will thoroughly inspect the property and provide you with a comprehensive report. This can help with negotiating the final price and it will also help your lender decide if they can approve the loan for that particular property. Having an extensive property inspection can actually save you money in the long run.
When purchasing a property you would need to consider insurance costs which will include mortgage insurance and various other insurance costs.
Consider Other Costs
Consider other costs such as stamp duty, real estate taxes, homeowner association fees and other fees that might come along with homeownership. Especially, if you live in a gated community, there will be charges that add up over time.
Don’t Accept The Asking Price
You see your dream home listed on a property website and its asking price $300,000 which is $25,000 above your budget. Don’t despair! All is not lost, everyone knows that you should never accept the asking price. Negotiate down! In fact, go as low as you think is reasonable, some sellers just want to get rid of their property as quickly as possible. They don’t want to hang on for a better offer and remember, if you don’t ask, you don’t get! So, ask and you might get the answer that you were hoping for.
Buying a property is a big decision, you should definitely think it through before committing to purchase a home. Consider some or all of the things we have mentioned in this article to facilitate the process of buying your new house or apartment. Analyze your finances, check your credit rating, decide on location, cost, age of the property and consider hiring an expert property inspector before you make a commitment to purchase your favourite home.