Buying Your First Home – Where To Start?
Buying a home is never simple. Buying your first can feel as daunting as climbing a mountain in sandals. Then again, it might also be the best thing you’ll ever do in your life. Here, we wanna give you a handy checklist of all the most important questions to ask yourself before joining the hunt. Take a whizz through these, answer honestly and see if you’re really ready:
1. Forget your gut, what does your wallet tell you?
To buy a home, you need to be at least pretty good at bringing home the bacon. Before you even think about buying, you’ll need to make sure you have enough saved up to make a down payment. You also need to be able to show that you’re earning enough to be able to make the monthly repayments of your mortgage. The size of your repayments is determined by the terms of the mortgage you’re offered by a lender.
These home loans can last for decades and this is stipulated by the lender when you apply for the mortgage. The amount you’re granted to spend on a home will be calculated based on what you can afford. There are other costs involved with the process but your mortgage and down payment are by far the largest and most important financial factors to think about..
2. What is a down payment?
The down payment is essentially your first foot in the door. It’s required to show your lender that you’re a serious buyer and effectively proves your commitment to the purchase. You’ve probably paid deposits in the past for things like car rentals, expensive mobile phone contracts and other pricey products. This is the same idea, except it’s for a house, so it’s much larger and much more important!
Right now, the standard deposit amount is around 20% of a property’s sale value. The size of the deposit is determined by your lender. It can vary quite a lot between lenders, locations and property sizes. Some lenders offer to approve loans with as little as a 5% deposit.
Some of us will get help from friends and family to build up the sum of money you needed for a down payment. If possible, you should always try and take this money as a “gift” rather than accepting loans from people.
When lenders look at your financial situation, any loans you have will be added to your level of debt and this can have a significant impact on your ability to buy. Lenders will base their mortgage offers on your debt-to-income ratio. So If you’re carrying a mega sack of debt and not earning enough, lenders may see you as too risky to back.
3. What are mortgage payments?
These are the payments you have to make on a monthly basis towards the repayment of your home loan. Most mortgages include a set of essentials that need to be paid, all rolled into one monthly repayment. In most cases, your payments will be towards your loan principal, the interest on your loan, homeowners insurance and the property taxes that are applicable.
Mortgage providers always want to know that you’re a responsible person, able to make the payments, and are generally at lower risk of sinking like a rusty ship under the financial weight of your home.
4. Can you be a grown-up?
It’s not just about money. It takes a huge amount of planning to pick the right place for you and your family. There’s a whole heap of long-term decisions that come with this mammoth of a commitment.
You’ll need to find a property agent you like, do your homework to find the right neighbourhood and location, hunt for decor as well as a swarm of other things you need to live with for a series of years or decades. You have to be ready to spend hours and hours pouring buckets of energy into building a life around the largest investment you’re ever likely to make!
If you’re ready, you’ll be jumping for joy at the thought of building a nest. But if everything’s starting to sound a little too overwhelming, you may need a little more time.
5. How’s your handyman game?
When you rent, you don’t really ever feel any strong sense of responsibility for your digs. If anything goes wrong, it’s your landlord’s problem. Things are very different when you own your own place. Anything wrong with the property is very much YOUR problem.
If you don’t wanna spend thousands on professional repair services all the time, you’ll need to get your DIY skills on point and be prepared to tackle the maintenance and repair needs of your property. If you’re not too bad with a hammer and feel confident in your handyman skills, then you have less to worry about. If any of the following common household repair tasks make you weak in the knees, maybe give things another think:
• Changing bathroom appliances like toilet parts and taps
• Closing and reopening the main water valve and controlling outdoor waterworks
• Cleaning all gutters of built-up debris
• Keeping all fire alarms in optimum condition
• Operating breaker switches
• Identifying studs and knowing the appropriate places to hang shelves
• Painting interior walls as well as exterior surfaces
Home improvement is a growing sector and it’s becoming increasingly easy to learn all kinds of essential skills for keeping your home in shape. It’s easy to find help online through a sea of great sources. If you have the will to learn, there’s definitely hope!
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