Buying your first home can be a daunting prospect with tons of information to digest and make sense of before you make what will most likely be the biggest purchase of your life. Fortunately, there are resources available to help first time buyers understand the entire process of buying a new home. For English speaking home buyers, there are many different tools available online though there may be small differences depending on your location. The USA was the first country that embraced the internet, and thus they have more services and tools available than those who live in the UK, Australia, New Zealand, and South Africa although these regions are quickly catching up.
Initial Planning and Preparation
The first step for any home buyer is to make a clear financial plan to save money for a deposit and to realize what property will be available for their budget. Before speaking to a real estate agent or broker, you should save enough money to cover at least 20% of the home value. For US homebuyers looking to save for a deposit, there are money saving tools to help you budget, plan and start a strict savings plan.
Home buyers who don’t raise the full deposit may need to take out insurance on the loan which can lead to more substantial repayments. Taking the time to get your savings in order will be a huge benefit, even if it means delaying a purchase in the interim.
Make Yourself Appealing
While saving for a deposit, it is an excellent strategy to start getting all your documentation in place and take any required steps to ensure you are appealing to any lenders. A smart place to start is with your credit report, and this should show you as a responsible, debt-free and able to manage your finances. Checking your credit score and taking steps to make sure it is as good as it can be before you talk to a bank will give you a better chance of lower interest rates and loan approval. Once you have checked your score, you should look at the best way to improve it and also fix any errors that may harm your chances of a loan.
An accountant should thoroughly vet any documentation that you need for a home loan application as any decision on loan approval is determined within your documents. A bank will need to see proof that you can afford the monthly repayments, which will require you to show a good salary coming in each month.
Speak to Lenders
Once you have a deposit and your documents in place it is time to speak with lenders to secure a home loan. For first time buyers, it is advisable to seek pre-approval as this will give you better-negotiating power with sellers and agents. For Australian buyers, before calling any agents, you should look to use available home loan calculator tools which let you adjust deposits, repayment schedules, and insurance premiums to give you an idea of the best available loan types for you. These calculators are available for UK and USA home buyers also.
There are a variety of mortgages available and using these free tools will help you realize what is best for your situation. Fixed rate mortgages are perhaps the most common as the rate is set for a period, so you know what your repayments are. A flexible mortgage will move as the national rate moves, this can get you lower repayments but can also lead to unmanageable monthly payments.
The real fun for first-time buyers is the hunt for the dream house and to achieve this we are spoilt for choice with the resources available. Real estate agents have grasped the internet with both hands as a way to showcase the homes on their books. Many listings have hundreds of photo’s and videos so you can get a good idea of what the property is like before seeing it for real. In the UK, services like Google maps have added features for house hunters where you can zoom along streets and around corners to fully understand where the property is and what the area feels like. Getting educated on what your ongoing bills might be (like council tax and utilities) is also possible through online tools, these can help to bring dreamers back to their senses of what they can or can’t afford.
There has never been a better time for new buyers to enter the market. The internet is flooded with tools and calculators to help any first-time buyer realize what they can buy and advise on how best to start planning the purchase for initial saving to closing the deal with an agent. The deposit and financial documentation are the vital components when applying for a home loan so taking the time to get these as good as possible will pay dividends when it comes time to speak with lenders.