Find out what you need to know before buying your first home.
Buying your first home is an exciting moment in life. It’s also a big financial commitment. The process of buying a house can be confusing and overwhelming. So if you’re thinking about buying your first home, here’s a step-by-step guide to help you get started.
You’ll learn how to find a property, choose the right loan and save money along the way.
What is the right way to purchase your first home?
Step 1: Decide on where you want to live.
The first thing you should do when looking for a new home is deciding where you want to live. This will determine all the other decisions that you make during the search.
For example, if you plan to have children soon, you might want to look at areas with good schools. If you don’t plan to move anytime soon, you may want to consider a location that offers more space or better access to public transport.
It’s essential to think about your lifestyle too. Do you like living near parks, shopping centers, or major roads? Or would you prefer something quieter?
Once you’ve decided where you’d like to live, it’s time to start searching for properties. You can use real estate websites such as Domain, Realestate.com.au, and REIWA to find homes for sale in your area.
Step 2: Choose the right loan
There are two main types of loans available when purchasing a home – interest-only loans and fixed rate loans.
Interest Only Loans
An Interest-Only loan is a type of mortgage where you pay off part of the loan amount each month but not the whole amount. Instead, you pay back the interest portion of the loan.
This means that you won’t have any repayments until the end of the loan term. However, this comes at a cost. You will incur higher monthly payments than a regular loan because you aren’t paying anything towards the principal balance.
A Fixed Rate Mortgage is a loan where you agree to pay the same amount every month for the entire duration of the loan. This means that you will always have the same amount of money left over after making your repayments.
If you decide to take out a fixed-rate loan, you could save thousands of dollars in interest by avoiding variable rates.
However, you will have to commit to a set repayment period. If you change jobs or circumstances change, you could potentially miss out on lower interest rates. So which one should I go for?
As a rule of thumb, we recommend going for a fixed-rate loan. They are usually cheaper than interest-only loans and offer some flexibility.
However, they come with a few drawbacks. For example, if you decide to sell your home before the end of the term, you will lose the benefit of having a low-interest rate. Also, if you need to increase your repayments, you will have to pay extra fees.
To avoid these problems, we suggest choosing an interest-only loan. You can still enjoy the benefits of a fixed-rate loan without having to worry about missing out on lower interest rates.
Step 3: Find a Property
Now that you know what kind of loan you want, it’s time to start finding a property. There are many different ways to find a property, including using a real estate agent, visiting open houses, online searches, and attending auctions.
Real Estate Agents
Using a real estate agent makes buying a house easier because they do all the legwork for you. They’ll also negotiate on your behalf when selling your current home.
Another great way to buy a home is to visit open houses. Open houses are events where potential buyers show their properties to interested parties. You can attend an open house without needing to make an appointment beforehand. Just remember to bring along a copy of your ID and proof of address.
You can also search through real estate websites for properties such as zillow.com, Realtor.com. These sites allow you to narrow down your search based on the property’s price, location, and size.
Finally, you may be able to get a good deal on a property by attending an auction. At an auction, people bid against each other to purchase cars, boats, and even homes.
The best thing about auctions is that you don’t need to pre-arrange a viewing of the property. So you can jump right into bidding.
When looking for a property, think about how much space you need. Do you want a big backyard or would you prefer a small apartment? Also, consider whether you’d rather live close to work or further away from your family. Once you’ve found a property that ticks all your boxes, contact the seller directly.
Step 4: Apply
Once you’ve found a property that meets your needs, it’s time to apply for finance.
Most lenders require you to complete a mortgage application form. The lender will then use this information to calculate your eligibility for a loan.
This process takes anywhere between 15 minutes and two hours, depending on the type of loan you’re applying for. After completing your application, you’ll receive a letter confirming that you’ve been accepted for a loan. This means you can now move forward with making an offer on the property.
Step 5: Make An Offer
Before you make an offer, you should check to see if there are any conditions attached. These might include things like inspections, legal costs, or stamp duty. If you find any conditions, ask the sellers if they’re willing to waive them. If not, you’ll need to decide
if you’re prepared to pay more money to secure a better deal. If you have no conditions, you can now make an offer. When doing so, try to keep in mind that the
seller has already received offers from other buyers.
So you’ll need to make sure that your offer is higher than the previous ones. Make sure that you provide all the necessary paperwork when making your offer. For example, you’ll need to provide a copy of your bank statement showing that you have enough funds available to cover the cost of the deposit. It’s also important to note that some banks won’t accept payments made via credit cards. So before you submit your offer, ensure that you have sufficient cash to hand over at the time of settlement.
Step 6: Negotiate
Negotiation is one of the essential parts of buying a house. It’s here where you’ll discuss the details of the sale with the seller. For example, you can agree to pay a certain amount upfront or split the cost of repairs. You can also negotiate the final selling price. Some sellers will accept less than the asking price, while others will demand more.
It’s worth noting that negotiation isn’t always straightforward. You may end up having to
compromise on something that you wanted. But remember that you only have one chance to sell your home. So if you miss out on a great deal, you could lose out forever.
Step 7: Sign Contracts
At this point, both parties should be happy with their negotiations. But don’t sign anything yet! The contract is just a way of formalizing everything agreed upon during the negotiation stage. So once you’ve signed off on the contracts, you can finally move into your new home.
Step 8: Move-In
Now that you’ve bought your first home, it’s time to start living life as a homeowner.
To get started, you’ll need to organize the keys. And if you haven’t done so already, you’ll need to arrange for someone to collect your mail.
Once you’ve moved in, you can start enjoying the many benefits that come with homeownership.