Buying your first home is exciting but it can be a daunting prospect. Your first home is one of, if not the, biggest purchase you will make in your life, so it makes sense to be fully prepared. To ensure you know what to consider when buying your first home, follow these key preparations.
It is important to be aware that you can borrow as a mortgage is not the same as what you can afford. There is a need for all first-time buyers to calculate their income and outgoings to work out how much they can afford to pay each month.
Your mortgage will be the main aspect to focus on what you can afford but buying a first home incurs a lot of one-off costs up front and other additional costs over the lifetime of your house. You should look to add a degree of flexibility when you determine what you can afford to pay each month.
You may see mortgage lenders providing “pre-qualification” services, where they guarantee a mortgage amount for buyers based on a limited amount of information. Many buyers have found that the level of mortgage they are approved for can be very different to what they are pre-qualified for. A pre-approval places you in a stronger position, it informs the seller that you are genuine in your intentions and it can save time by allowing you to focus on property that you will be able to afford.
Given that your credit score is based on many things, including decisions that may have occurred a long time, there is not always a lot you can do to improve your credit score. However, as soon as you are serious about buying a home, you should make yourself aware of your credit score and you should take steps to strengthen your credit score.
One of the strongest reasons for obtaining your credit report in advance of applying for a mortgage is because your credit report may contain mistakes which harm your rating. If you take active steps to remove any errors and improve your credit score, it is likely to help you find a more attractive mortgage.
Other things to consider include:
Review the different types of mortgage and choose the one that is right for you
Find out and collect the information you need when applying for a mortgage
Make sure you know what a reasonable offer is
Make sure you understand the terms of a purchase agreement
Be very clear on the true extent of your closing costs
Understand the differences in valuation reports and determine what is right for you
All of these aspects are vital in getting the best value for money when buying a home, but if you are unsure about these aspects, it can be difficult for you to know what to do for the best. This is first time buyers will find that working closely with industry professionals is a smart move.
A property management specialist or estate agent that deals with first time buyers on a daily basis will save you time while providing you with the information and guidance you need to make the best decisions when buying your first home.