Buying your first home can be an exciting time, but if you are not prepared, you could find yourself overwhelmed by all the red tape and paperwork involved. That’s when you need the help of a home finance expert who does all the hard work, on your behalf, at no cost to you.
ooba shares the top three tips for first-time home buyers…
1. Assess your affordability and credit history
From the beginning of the home-buying process, it is essential to ensure that you are house hunting within the right affordability bracket.
Banks calculate affordability based on disposable income after deductions and expenses. Your disposable income must be more than 30% of your gross monthly income for banks to approve a home loan. Use an affordability calculator to work out a realistic buying price.
Your credit history will be assessed by the bank to ensure that when you’ve borrowed money, you’ve paid it back and that your credit history is clear.
You can improve your chances of getting approved by getting prequalified. Prequalification puts negotiating power in your hands. This is a quick application resulting in a certificate which shows the type of deal, bond amount and interest rate you could expect to be offered when you apply for your home loan.
Karen Karam, Regional Sales Manager for ooba, says prequalification allows the first-time home buyer to know exactly what is affordable and to budget better for additional costs such as legal fees, transfer duties, bond registration fees, bank charges and insurance fees. She says when you are armed with a prequalification certificate, you have the confidence to negotiate a better buying price from the seller.
2. Use your home loan wisely
Given current economic conditions, it might be wiser to weigh up the pros and cons of taking the maximum amount the bank has approved you for or to go smaller and make bond repayments more affordable.
Avoid borrowing as much as you qualify for, as tempting as this might be, and rather take a long-term view, keeping in mind fluctuating interest rates and your available cash flow.
Be sure that whatever you do, it’s within your comfort zone. This is a decision only you can make. Honestly ask yourself the following questions:
– Would you rather be conservative and fairly certain that you can make your bond payment without being stretched financially?
– Is now the right time to be buying?
– Is your financial picture looking healthy?
– How does your credit situation look?
3. Maintaining a clean credit record
Once you have moved into your new home, make sure that you maintain good relations with your bank by making payments on time. Remember that the bank will hold you accountable for your home loan until you have settled it and the ownership of the house has been transferred to you.
Put aside an emergency fund for those unexpected costs such as plumbing, tyre bursts and general maintenance costs. An emergency fund will prevent a situation where the home loan fund is used for other ad hoc costs.
To save costs, maintain the property regularly. Karam says regular maintenance allows for repairs to be fixed when they are still small, manageable and less costly.
http://www.property24.com/articles/3-financial-tips-for-first-time-buyers/21322 – Property 24
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