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Looking To Purchase A Home?
Purchasing a house will most likely be one of the most terrifying yet life-changing and fulfilling decisions you will ever make. As a potential home buyer, there are considerations to make before making a purchase, whether it's the first time or not.
Whether you're a first-time house buyer or trying to make a sound real estate investment for yourself, don't start the homeownership process without first completing your homework - study, research, and more research. In this post, we've compiled a checklist that will provide you with tips for buying a home.
Tips To Follow When Buying A House
Figure out your budget
When you start looking into purchasing a house, the first thing you should do is examine your credit history. You may do this once a year for free at an authorised credit reporting bureau. This will give you insight into whether your credit score is poor or sound, which might affect whether or not you get authorised for loans and how much you will be approved for.
You may not have an official credit history if you are new to Australia and are not yet a permanent resident or citizen. If so, visit the Office of the Australian Information Commissioner for further information about accessing your credit report in Australia.
Investigate home loans
Once you've dealt with your credit score, you should look into home loans. Start by looking at the current interest rates and what loan terms may be appropriate for you if your selected mortgage product has a redraw capacity. Or if you can make extra repayments, whether an offset account is available, and how frequently interest is calculated and applied to your home loan.
Looking for comparative rates is the most innovative approach to comparing two (or more) home loans. With so many lenders and institutions offering house loans, you may want to consult with a respected mortgage broker, who would sort through all the possibilities and help you pick the best loan for you.
Don't ignore pre-approval
It might be tempting to delve right into house searching, especially if this is your first time. However, before you can start comparing houses, you need to receive pre-approval for a mortgage. It's also crucial to understand how pre-qualification varies from a pre-approval. Let's go over that distinction.
- Pre-qualification letter: A pre-qualification letter estimates the amount of a home loan you are eligible for. It depends on an informal assessment of your income and other factors.
- Letter of pre-approval: Also known as mortgage pre-approval, this letter is a formal document issued by a lender. This letter informs you of how much loan money you may obtain depending on your financial records, including bank statements and your credit score.
Remember to account for additional expenses
House buying is not only about your mortgage. All residences in Australia include additional charges, including a typically large deposit - sometimes as much as 20%! If your deposit is not enough, you may be eligible for Lender's Mortgage Insurance (LMI).
Lenders Mortgage Insurance is insurance purchased by a lender to protect themself against the risk of not collecting an existing loan balance if you, as the loan borrower, fail to make your loan repayments. Additionally, it protects the lender if the property is sold for less than the existing loan balance.
You must also pay stamp duty. Afterward, be sure to account for legal and conveyancing expenses, as well as building and pest inspections. All these extra costs could add up to thousands of dollars when purchasing a home in Australia.
Choose the appropriate house and neighbourhood
Considering your lifestyle and budget, weigh the benefits and drawbacks of the various types of houses available. For example, a condominium or townhouse may be less expensive than a single-family home; however, it will have less privacy due to shared walls with neighbours. When looking for condominiums, townhouses, or houses in planned or gated communities, do not forget to factor in homeowners' association costs.
Another alternative is to purchase a fixer-upper. This is a single-family home that needs upgrades or repairs. Fixer-uppers often sell for much less per square foot of space than ready-to-move-in homes. You may, however, need to budget for repairs and remodelling, depending on the state of the house. Renovation mortgages combine the cost of the house and the cost of upgrades into a single loan.
Pay for a home inspection
A house inspection is a comprehensive examination of the mechanical and structural integrity of a given building. Professional inspectors check for any issues and give you a detailed report that makes it possible to make a well-informed decision about purchasing property.
Below are a few things to remember about house inspections:
- Radon, mould, and vermin are not tested for in standard inspections. Therefore, it is crucial to understand what is covered in the inspection and what further inspections you may require.
- Ensure that your building inspector has access to all areas of the house, including the roof and any crawl spaces.
- Traditionally, you should be present during the inspection. Accompanying the inspector as they undertake the inspection allows you to familiarise yourself with all parts of the house and gives you a chance to ask questions in real-time. If you are unable to attend the inspection, carefully read the inspector's report and clarify anything unclear.
Get an adequate home insurance cover
Before closing, your lender needs you to get home insurance. Home insurance pays for the cost of repairing or replacing your house and possessions if they are stolen or damaged due to an occurrence covered by the policy. It also offers liability insurance if you are held liable for an accident or an injury. Also, purchase adequate house insurance to pay for the expense of rebuilding if your home is damaged.
Keep physical documents of your paperwork
Don't neglect the paperwork once you've decided to buy a house. Yes, online storage is the logical choice for document storage, but maintain a physical duplicate of the deed, mortgage statements, closing disclosure, and other papers in a secured, fireproof filing cabinet. Additionally, inform everyone else mentioned on your loan application about the location of the paperwork and how to retrieve them in an emergency.
Maintain your credit score
Do not start a new credit line, such as getting a new credit card or even a personal loan during the house-buying process. Lenders will pull your credit record whenever you apply for mortgage pre-approval and do it once more before you sign the mortgage and close on the house.
If they discover that you've taken out yet another loan or a new line of credit, your credit amount has grown, or you have begun to make late payments, it might jeopardise your final loan approval.
Additionally, make sure you pay all your bills and obligations on time. Don't try to hide your credit score for better or worse, and don't start any reckless expenditure. Lenders want to verify that your future payment practices are consistent and predictable.
How To Choose The Best House Inspector
It is advisable to employ an expert building inspector before purchasing a house. In most circumstances, you can condition your purchase contract on a good inspection. That is to say, if you are unhappy with the inspection report, you could cancel the contract, get a refund on your money, and pull away from the purchase.
Alternatively, you might bargain with the seller to reduce the price or repair damaged areas discovered during the inspection. Even if the inspection results force you to accept your new house as-is on the contract pricing, a professional building inspection may provide valuable insights into the place you are purchasing and assist you in planning for future upkeep and repairs.
Here are some crucial tips for finding the best inspector and getting the most value from your house inspection:
Look for a bonded and insured building inspection company
Whether you choose a large firm or a solo inspector operating independently, you should ensure that whoever inspects the house is not only insured but also bonded. Undoubtedly, the most critical question to ask while recruiting for a good home inspection provider is whether they do have job insurance cover.
A home inspector may be permitted to perform business without insurance in your location. The issue with uninsured house inspectors is that if they get hurt during the inspection, they may try to hold either you or the homeowner accountable.
Climbing into attics and exploring basements or crawl spaces carries some danger, which is why qualified home inspectors have insurance covers. You don't want to get unnecessarily sued if, for instance, the basement steps are rotting and the inspector falls and fractures his leg. If the home inspector is not insured or bonded, you should immediately remove them from your list.
Get a documented reference from your real estate agent
Your realtor is an excellent source for finding a reliable building inspector. Do you know and trust your real estate agent? Do you believe they look out for your best interests rather than their own? If you can firmly respond yes to these two questions, there is no reason not to accept your realtor's suggestion on who to hire as a house inspector.
If your realtor has been in the industry for a long time, they have most likely met several house inspectors. Your agent can tell who performs a thorough job and who does not by working alongside them. If you've recently met a new real estate agent and don't know them well, you might need to search for a building inspector on your own.
In the real estate sector, as in any other, there are excellent ones. Some real estate brokers may direct their customers to a selected list of house inspectors based on their self-interest rather than the quality of their service. A good building inspector will not only be thorough but will also take the time to clarify the gravity of a problem. If the condition they discovered is common and not cause for actual concern, they should communicate it to you too.
Accompany the inspector while they examine the house
While you are not forced to participate in the inspection, it is in your best interests to tag along. The inspector may explain what they are searching for and provide you with vital information about the home's condition. If you decide to buy the house, your trip with the inspector will allow you to see where everything is located in your new home and take note of any places that may cause you problems in the future - even if they are not severe issues at the moment.
A good building inspector will also cover the fundamental aspects of maintaining the building's principal components. While their primary job is to detect severe structural and mechanical flaws, an inspector may also be an excellent resource for teaching you how a house should function. Preferably, the real estate agent will also accompany you on the inspection.
Having the agent there guarantees you receive all the necessary information regarding the house's condition. The finest real estate agents almost always attend house inspections for the benefit of their clients. When it is time to negotiate the price after the inspection, it can be difficult to pinpoint the faults uncovered if your real estate agent was not present to witness them during the inspection.
Compare the costs of hiring various house inspection services
Nobody likes to overpay for home inspection services; therefore, checking around first for great offers makes perfect sense. However, you must put in the necessary work to ensure that you are comparing only the best in the field; do not go for cheap but mediocre. When comparing firms, acquire a complete overview of what each company conducts during an inspection.
A more comprehensive examination is worth the extra money. A firm with great reviews or experience in a particular sector is also beneficial. There's nothing overtly wrong with trying to save a bit of your money, but be sure you're employing someone you can trust to perform a decent job.
Request a sample inspection report
When choosing a house inspector, it's a good idea to check their inspection report. Various home inspection reports may take several forms, ranging from text only to colourful reports with images. If the report is prepared in an understandable manner, you will have an easier time reading it.
Any inspection company you are thinking of hiring ought to be able to offer you a sample of their inspection report so you can determine if the format is suitable for you. It is strongly advised to hire a building inspector that gives colour photographs of the faults they discover. A picture showcasing the faults is worth more than a thousand words when it concerns house inspections.
Considerations When Picking A Neighbourhood
Buying a house can be described as many things, and interesting is one of them. If you want to buy a house, you've probably begun looking for a good neighbourhood to move into. You may even have a basic idea of what you want in a house; however, if you haven't thought about any of that, you should probably ask yourself where you want to live.
This is a vital consideration when purchasing a house. If you're unsure what you should go for in a particular neighbourhood, below are a few things to consider when exploring your perfect location.
Neighbourhood security
When seeking to buy a house, the safety of the area is critical, especially when you have children. Here are some considerations when determining if an area seems safe:
- Crime statistics: Every region will have some sort of criminal activity on given occasions, so don't be too disheartened if you can't identify a fully crime-free neighbourhood. However, a high degree of activity may be a red signal if you check crime reports on the municipal website or call local law enforcement.
- Neighbourhood watch: Is there a neighbourhood watch group in the area? This isn't a game-changer but something that certain families appreciate. Inquire with the local police department or a resident. A street sign signifying the presence of a neighbourhood watch area may also be present.
- Street lighting: Adequate street lighting may make a person feel safer in their community.
- Talk to your neighbours: If you see someone walking their dog, mowing their yard, or even getting their mail, introduce yourself and tell them you're thinking about relocating to the area. The residents will be able to inform you how strongly they believe the neighbourhood is safe.
Getting to work
The location of your workplace to where you reside is a significant consideration, especially if you want a short commute. If driving yourself isn't an option, or if you choose not to, consider other modes of transportation, such as transit buses or even light rail.
Consider extra living expenses
Other costs of living elements to consider are gasoline and transportation expenses, healthcare expenditures, utility rates, food prices, and miscellaneous taxes. Some of these criteria are constant across states or regions, restricting the economic benefit of selecting one neighbourhood or town over another within a specific commuting area.
Examine the area's schools
If your household includes children, you should conduct considerable research on the safety as well as the reputation of the area schools present in your new community. If you have little kids in your household, you'll probably need to look for dependable child care providers in the neighbourhood as well. You may also use childcare apps to discover providers in your new neighbourhood.
Ready To Buy A Home?
As you've read in this article, depending on how well you prepare, buying a house may be an incredible or a terrible experience for you, especially if you're a first-time buyer. Are you about to buy a property and need professional assistance to make an informed decision? If this is the scenario, just contact the necessary professionals to assist you. These include realtors, building inspectors, and lenders.
