Q: I’m looking to put some roots down and buy my first home. I’d like to know what you think are the most important things I should do in preparation for this?
A: Buying a first home is incredibly exciting and also very rewarding. For inexperienced first home buyers it can be daunting, but there are plenty of online resources to help you learn more about buying property and other experts you can speak to who can help bring you up to speed on some of the need to know details.
If you’re starting from scratch, these are the four most important things to do at the start.
1. Sit down and work out your budget. The worst thing you can do is over borrow. Before doing anything, have a think about your current situation and your plans for the next three, four and five years’ time. Work out if there are any possible changes in your family situation, like are you thinking of starting a family? Or, is your employment secure? There are some good budget templates online to help make sure you think of everything.
2. Speak to property experts. Go and see two or three really well credentialed professional real estate agents to get an idea of the markets in the areas you are interested in buying in. Get a good guide on how much properties are selling for and how quickly they are selling because this will give you a handle on how competitive the market is.
3. Check your credit reputation. Banks and other lenders will check your credit score before lending you money, so it pays to make sure that your financial house is in order. Just because you’ve always paid your bills on time doesn’t necessarily mean that you have a good credit history. Other things such as applying for too many credit cards can impact your credit score. This doesn’t cost you anything and you could be surprised at what you find.
4. Get home loan pre-approval. It’s also really important to work out exactly how much a lender will actually lend you. Getting a pre-approval, also known as conditional approval, will let you know how much you may be approved to borrow. You can do this directly with your bank, but I’d also recommend you get a free, expert second opinion from an accredited mortgage broker who can take you through the whole buying process, help you work out how much you can afford to borrow and what loan would be right for you, and even help you complete all the paper work.
I believe these four things should help you feel more prepared to take on your first property purchase. There’s no such thing as too much preparation, so be thorough with your research!
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