If you are a first-time buyer, chances are the home buying process has been somewhat of an experience thus far. There is a lot to think about when considering what to look for in a property. It is important you take your time and fully understand the process and implications of buying a house before committing to what is likely to be the biggest debt you will have in your life.
With an estimated 1 in 12,448 properties in the US being in foreclosure in 2020, what do you need to know before committing to purchasing your first property and taking on a mortgage?
You can afford the associated costs.
The purchase price you negotiate when you buy your house isn’t the final price you will pay. Hence, it is important you know exactly what you are expected to pay upfront, so you are ready for all the associated costs and fees associated with buying a house.
The closing costs are usually between 2 and 5% of the house price and are payable upon purchase. You may also be required to pay for inspection costs which could be a few hundred dollars and is dependent on the inspector you choose. Other payments included in the closing costs include appraisal fees, Surveying fees, broker fees, home warranty, and transfer tax. The total cost of all of your fees depends on the type of mortgage you take out, the size of the mortgage, and requirements from your lender; for example, some lenders stipulate you need to pay for added insurance related to the size of your deposit.
You are aware of any repairs that need doing.
If you are saying out for a good inspection, you will likely be informed of any issues found. However, not all inspectors are equal, and the level of detail they are into is directly related to how much you are willing to pay. The more you pay, the better you can expect the inspection to be.
This is important as the last thing you want to find when you move in is severe damage you cannot afford to fix. not all sellers will be honest with faults and will be looking to sell for as much as possible and leave any major work to a new owner. So make sure you get a thorough inspection to identify issues such as a full house rewiring, mold issues, structural concerns, roof damage, pest infestation, and more.
Is this your forever home?
If you are looking for a forever home and plan on living here for a long time, then going with your heart and paying that little bit extra will be well worth the investment over the years. But if you are looking for a starter home, then it could be worth you compromising on what it is you are looking for or the area you want to live in to find a more affordable property to allow you to put your stamp on it, increase the value during the time you live there and then put any profit towards a new property in the future when you are ready to move on. Knowing how you will be living in this house and how long approximately will allow you to make an informed decision.