Buying your first home is one of the most significant, exciting, (…and a little bit stressful) decisions you will make. Since it’s your first home, probabilities are you know very little about what needs to be done. Being unprepared in buying your first home can lead to unexpected costs and actually have you struggling to piece things together at the last minute. To help you take some of the stress out, here are seven things first home buyers need to know.
Getting pre-approval for your loan is one of the obvious things but it seems like most people often forget about it when buying their first home. It is a letter given to you by your lender specifying how much you can expect to borrow. You can use a loan calculator to get an estimate of how much you can borrow for your home loan.
A pre-approval can help you set a realistic budget and also help you move into your first home fast. Having pre-approval will let sellers and real estate agents know how serious you are, allowing you to move forward with confidence once you find your ideal home.
It is a duty imposed on majority of the property purchased in Australia. The amount of your stamp duty will differ depending on the purchasing price and in which state or territory the property is in. It needs to be paid on settlement so make sure that you include it in your budget. When working out on your potential borrowing capacity, your home loan specialist will factor it in for you or you may use a stamp duty calculator to get a quick idea of the extra costs including any exclusions that may apply.
You’ll usually need to pay the Lenders Mortgage Insurance (LMI) when borrowing more than 80% of the property’s value. It is a form of insurance in which the lender is protected in case that the borrower defaults. What you can do is to save up a larger deposit or use a guarantor to help you avoid this requirement.
Your excitement in buying your first home can make it easy for you to forget about the sales contract. Before making an offer, the contract of sale needs to be reviewed by a solicitor or qualified conveyancer. Make sure to get yourself a copy of the contract especially if you’re serious about a property.
Conveyancing is a process in which the legal title of the property is transferred from a seller to a buyer. It’s important to look for a qualified and proficient conveyancer or solicitor to handle all necessary steps included in the conveyancing process because it can really be tedious and complex. You may also want to know more about why you need conveyancer.
Your conveyancer or solicitor will prepare a statement of adjustments in the week before the settlement and provide you with an estimate of the costs in advance. It will cover the changes in any rates, taxes, and fees that are associated to your purchase. As included in the property settlements you’ve made, be sure to allot additional funds to cover for the fragment of the adjusted rates.
A home may look good from the outside but it’s always better to make sure that you have a qualified inspector check it before signing on the dotted line. A professional home inspector not only helps you find hidden issues such as pests, structural damage, and rising damp but also potentially saves you thousands or even thousands of dollars.
Buying your first home is undeniably the most exciting time for you. However, it can also be a confusing process. Knowing the abovementioned factors will have you ready to move in the near future. Also, be sure to consult with a specialist whose knowledge and experience can guide you in buying your first home.
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