What You Need to Know Before You Buy a Home
Presuming you haven’t won the Lottery, or don’t have half a million dollars in the bank, you’ll no doubt need a home loan before you can buy a house. But first, ask yourself if you really want to own one. Homeownership isn’t obligatory, but if you really do want to own your own home, the steps are simple when put in a bulleted list:
Save for a deposit and build a savings account.
Improve your credit rating
Work out what you can afford
Get preapproved for a mortgage
Have all the check done, pest, building, electrical
Buy a house you like
But the devil is always in the detail so read on:
Do You Really Want to Own a Home?
Depending on your circumstances, owning a home might not make sense, or perhaps it’s not right for you at this stage of your life. There are those who believe that paying rent is a waste of money when you could be paying off a mortgage, but if you have a job that requires you to move house a lot, then renting is the obvious option. There are some excellent points to renting, including the fact that you aren’t responsible for insuring the house (only the contents if you wish), the landlord does any major maintenance, and you don’t have to pay the council rates.
Everyone’s An Expert
The minute you tell your friends and family you’re going to get a home loan and buy a house, expect a barrage of well-intentioned advice. What you need to be aware of is that the property market changes all the time, so what was good advice for Uncle Ted might not work today. The best advice they can offer is to choose your real estate agent carefully, check their level of experience, how many buyers they’re representing, and ask for references. Don’t hire the first agent you come across but shop around. If you're renting, stay on a monthly lease so you won’t be penalised if you have to leave.
Find Out if You’re Eligible For a Home Loan
The most critical consideration for prospective home buyers is to be able to secure a home loan. There’s not much point in searching for your dream home if you can’t get a loan to buy it. Your lender will need accurate details of your financial position including a list of your assets, employment history and annual income. You’ll need to show evidence of your existing debts and your budget so the lender can assess whether you are in a position to repay the mortgage. If you can show the lender you have a good savings record your application will be looked at in a favourable light. Clearing your debts is another way to make sure your application will be successful, or if you can’t clear them, show that you pay them on time, without fail.
Can You Afford the House You Want?
Once you decide how much you can spend, you have your deposit ready, and are sure you can afford the house you have your heart set on, make sure your home loan has been approved so you can make an offer and beat the competition if you get the chance. But make sure you’re not in over your head because there will be other houses and if a free-standing house is proving elusive, consider a suburban unit. This can be a good starting point for first-home buyers.
You'll need to decide whether you want to buy through a private sale or at an auction. If you like a sense of theatre then maybe an auction is for you, but the most common type of transaction when buying property is by private treaty. But beware, because anyone buying a home, especially for the first time, can be caught with a ‘lemon’. There are homes on the market with structural faults, cracks, rising damp, and electrical and plumbing problems which could cost tens of thousands of dollars in repairs. Before making an offer, you as the buyer should look for faults, and also hire a building inspector to search for problems, and also let you know what it will cost to repair them.
The old adage, ‘buyer beware’ applies big time in real estate, which means you buy a house in the condition it's sold. If there are faults, you can’t take it back and exchange it for another one, so you’ll have effectively bought yourself a ‘lemon’.
Check Building, Pest and Electrical
Before you buy any home, you must have a professional inspect the electrical installation and all the components and to make sure safety standards are up-to-date. The wiring has to be grounded and in proper working order and outlets and switches inspected to make sure they’re the right type and are working properly. Outlets should have no cracks or defects and there should be safety switches in the power box. Older homes often have older wiring so this needs to be checked in case the whole place needs rewiring.
Always Get Independent, Expert Advice
If you’re a first-home buyer, you need to seek legal advice before signing a contract. Your lawyer or conveyancer can advise you, but make sure the expert you consult is independent and doesn’t also work for the real estate agent or the vendor. Everything you need to know about the property you are buying will be disclosed in the title and contract of sale. This means you’ll need a conveyancer or lawyer to check the documents for such things as covenants or easements, which you really need to know about before you sign up, rather than afterwards.
Ready to get started? Call or text David Hutchinson of Sutton Group West Coast Realty in Vancouver to discuss your first or next home sale or purchase on 778-839-5442 or send an email to firstname.lastname@example.org.
Alex Morrison has worked with a range of businesses giving him an in depth understanding of many different industries including home improvement, financial support and health care. He has used his knowledge and experience to work for clients as diverse as Acacia Pest Control, Cosh Living and Me Bank to help them reach their business goals.