Buying a home is a huge life event for most of us, and much more so if it is our first foray into the often complicated, frustrating, not to mention expensive world that is the property market. The whole process is full of pitfalls and problems, problems which can seem overwhelming and insurmountable for the uninitiated. However, negotiating the minefield doesn’t have to be so daunting, and with a bit of preparation, research and know-how even the greenest property hunter can emerge relatively unscathed – and with a new home which suits their tastes, lifestyle and budget. Here are some things to look out for as you prepare to take your first step on the ladder.
Research and groundwork
Ask yourself some very straightforward questions. Are you ready to make this commitment? Can you afford it? You will have to spend a large amount of time not only searching for a property but preparing documentation, finances and other logistical issues. Research must be conducted into the property market, and also into the full costs of home ownership. Research the market to see if prices are rising or falling, and check out the average prices of similar homes in the neighborhoods in which you will be looking.
Down payment + Loans
You’ll need a downpayment to purchase a property. Whilst it is possible to use a downpayment of less than 20% to secure a home loan and get started, it is strongly advisable to reach that 20% mark – not only will you have paid a bigger chunk towards the total of the property, it will also make you exempt from lenders mortgage insurance, which can add significantly to your monthly outgoings. Investigate what kind of home loans you qualify for, and also what options the home loan comes with. These vary greatly, for example, some offer freedom to split the credit or provide you with the line-of-credit facility. Your personal financial circumstances will determine what kind of loan you qualify for – but as above, research thoroughly, there are plenty of resources available for you to find a loan tailor-made for your needs.
Head should rule heart
When you are buying property it is easy to become emotionally entangled in the process. The idea of home is one which has strong connotations of comfort, security, and sometimes even nostalgia. During the process of purchasing a property try to banish these feelings – look at this as a purely business endeavor and it will benefit you in the long run. Remember, once you’ve sealed the deal and bought a property you have all the time in the world to make it feel like yours.
Prepare your finances
As mentioned before, buying a property is full of costs, some apparent, others not so obvious, or even hidden in complex legal documents. Make sure you work with a trustworthy real estate agent (more on that below) and make sure you put your affairs in order before beginning the process. If you have outstanding debts, try to pay them, or at least consolidate them. Pay off and manage any credit cards you may have. All this which pays dividends when negotiating for a home loan. In fact, studies show that having a credit card with a balance within 20% of the full credit limit (and making consistent monthly payments) is a real boost to the credit score. Ask for help from family and friends – if there is an allowance or an inheritance awaiting you, see if you can call it in early to top up your down payment potential. It also looks very good on your financial record if you have been in the same job for a long time.
Maybe this should be at the top of the list. Don’t think you can go it alone when it comes to purchasing a property. Real estate agents exist for a reason – they can guide you through the choppy waters of the housing market, assist you with the complex paperwork you’ll face, and generally support and advise you throughout the process. Don’t feel pressured to go with the first agent you meet though – shop around until you find someone you are comfortable with and who you trust. Sure, they take a commission, but you will find that in the end they will save you a great deal of money and hassle, and help you find the property of your dreams at a fair price.
Like all investments, property purchase can go well or it can go badly. The secret lies in being prepared, seeking adequate counsel, doing your homework and assessing risk and reward with a clear head. Once you manage those things then you’ll be well on your way to owning a property which will bring you many years of satisfaction and happiness, hopefully within your means and budget. Good luck!