Things to Know About Buying a Home

buyying home

Buying a home is a huge financial investment and you deserve to feel confident throughout the process. In this article, we’re discussing all of the things you should know about your home mortgage before you get serious about your decision.

When making a decision on your home, you should ensure you understand all of the home specifics, such as closing costs, interest rates, and your loan terms. You should also understand how the market plays into your decision and what some of your negotiating power is.

Settle On a Definitive Settlement Amount

Before you sign the big deal, you need to take some time to decide whether you can afford it. Home loan repayments and the costs of owning a home can greatly impact your budget more than rent payments. You have to consider closing costs and insurance costs as well as how interest plays into your financial plan over time. You should consider the maximum repayment that you are willing to put toward your loan and you can use our repayment calculator to gather an estimate of what repayments are.

At this stage, you will need to decide what your down payment will be. In most cases, you want it to be at least 10% of the property value, no matter how much you can borrow. It’s still important to understand how much the bank will be able to loan you. If you decide you can handle all of the costs associated with a home loan, you should consider speaking with a home loan advisor who can walk you through all of your mortgage options. They will also be able to walk you through the pre approval process to give you a better idea of what you can qualify for.

Don’t Forget the Hidden Costs

As we touched on, the costs of owning a home are much different than those of renting a home. Before you think about closing on your new home, consider the following expenditures:

  • Closing costs
  • Moving costs
  • Maintenance and Repairs
  • Homeowners’ insurance
  • Mortgage insurance (MIP or PMI)
  • HOA fees
  • Utilities

The Search Is Critical

The more legwork you do on your home loan, the more you will be prepared for whatever the process throws at you. You will be far less likely to overpay for your home if you avoid selecting something you don’t want. The following tips will come in handy when conducting your search:

  • Decide on the areas where you would like to live.
  • Search the recent sales prices for your location and compare them with the suburb profiles on real estate websites.
  • Reach out to local agents to find out their sentiments on the current status of the market.
  • Chat with local agents to gain a better understanding of how the market trades.

Deciding on what can potentially improve your property value is just as important as deciding the most important elements of your home. Try considering things such as the areas school zone, future building plans, transport options, and access to amenities like grocery stores.

Consider Renovation

If you already have a home, you should consider renovating as it could boost your property value and equity. There are costs to consider with renovation but you have a tremendous asset at your disposal and you should use it.

Be Confident

Buying a home is one of the largest – if not the largest – investments you’ll ever make, so you should make sure you aren’t impulse buying like you would in the check-out line at the grocery store. Remember, if you don’t feel comfortable with your decision, you can always walk away before you’re too far in the closing process. There are other properties out there and you shouldn’t buy a property in hast because you feel you need to.

As with any other financial investment, you shouldn’t be investing in a home because of emotions. Of course you’re going to be emotionally invested in a purchase of this size but make sure you also make your decision based on logic. Even after signing a purchase contract, you will have to wait a few days for it to clear so you can think about the purchase and potentially back out if the details aren’t in your favor.

When you’re ready to negotiate, here are some tips. Consider supply and demand. If you notice there is no one else in the property, you need to conduct an investigation into why that is. Are there other similar houses that might drive the property’s value down? If this is the case, you might be able to make an offer below the asking price. ON the other hand, you will want to uncover if there is anything wrong with the property.

You should also flow with the market and not the asking price. Remember, sellers are trying to get more than the market worth for their investment – that’s how they turn a profit. You’re trying to get the house for below asking price and potentially below market price. Never use the seller’s asking price as the starting point. Price also isn’t the only negotiating tool. You can also debate settlement terms based on things such as your home inspection or appraisal.

Local Market Indicators

Local market indicators can be tricky because you have little control over them and it’s hard to stifle your emotions in the face of their sway. The market can be an unforgiving place and the reality is you might never have your dream home in the location you hoped for. Some market values also dictate whether or not owning is even an option. You have to base your decision on the market as much as your personal preferences.

Conclusion- Things to Know About Buying a Home

If you’re considering buying a home, you need to carefully consider all of the specifics before you pull the trigger. Looking at your preferences, what the market factors are, and all of the associated costs will ensure that you get the home you’ve been looking for without any drawbacks. Once you are certain about pulling the trigger on a home, you should speak with an experienced loan advisor who can walk you through your decision.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.