Buying house for the first time is exciting as well as stressful at the same time. Starting from finding the best home in that perfect location that too within the affordable limits to financial management, looking for various mortgaging options to finding the best one. Purchasing a house demands a lot of planning as for many, it’s a lifetime opportunity.
Here’s a guide to help you get ready to make one of the most significant purchases of your life:
Avoid buying if you plan to move soon
Either due to job requirements or in search of better career opportunities, people tend to move from one place to another. This can be a major point of concern in the case of buying a house. Many up-front costs are associated with purchasing a house. The closing price will be the major point of concern. If the time gap between purchase and the sale of the house is quite less than the closing cost is levied on both buying, as well as selling of the house.
Hence, if the chances of your shifting to a different location are higher shortly than renting a house would be a much better option than purchasing a house.
Prepare your finances for the mortgage process
Before even starting the house search, the very first thing you should start is planning your finances. For buying a house, you need to be financially fit. This means you should have a verifiable income, good credit, and funds to close.
Check your credit score
Maintaining a good credit score is very important as it holds a lot of weight for loan approval. So, check your credit records and in case of any error, try to improve your credit score. Minimum of six months is required to bring improvement in the credit score.
Enough cash for a down payment
Another thing that you need to consider while purchasing a new house to have sufficient cash to make the down payment. Down payment varies from 3% to 20% of the purchase price. While saving money to make the down payment, it’s advisable to keep extra funds that you would need for closing purpose.
Keep your documents in order
The last thing you want is the rejection of your mortgage application due to lack of documents. Keep all the necessary documents in order so that at the time of applying for a loan, you won’t face any problem.
While listing down the features of the house consider the additional or special features which you would want in your new home. This might be a storeroom, garage, fencing, or a deck. While purchasing a new house, you should look for some unique features that would make your stay quite comfortable like cooling and heating set up, the proximity of school, market, etc.
Talk to your real estate agent and tell him/her all the basic as well as the special features you are looking for in your dream house. Your agent would guide you in making a priority list of the features. Also, there might be some features that can be added afterward i.e., after you start staying in the house.
In many cases, first-time buyers overlook the importance of location while purchasing a new house. Kind of neighbourhood, distance from the workplace, availability of school (in case you have kids), a distance of nearest grocery stores, places for shopping, entertainment centres, etc. matters a lot. If you are buying a house for living, then checking the locality is very important. You and your family are going to stay there, hence checking the safety and security of the neighbourhood is very important.
Decide which mortgage products that you will pursue
Several kinds of mortgage options are available in the market. Do thorough research and compare the pros and cons of these products. Select a product that suits your needs and requirements. Consider factors such as interest rate, the time span for repayment, etc. Selecting the right mortgage lender is as essential as choosing the right mortgage product.
Schedule a home inspection
Once you put in your offer, schedule a home inspection before finalizing the deal. You can either go for a full house option or a Four-point inspection. A full home inspection may add to your expenses, but it would give you a clear picture of the house. In case you find any major flaw in the house, you can use this report to back out from the deal.
Planning for purchase of the house should start months before finalizing the property. Start planning of your finances, checking the credit score, comparing mortgage rates, listing features you want in your house, and most importantly saving money from today itself.