Things to Do Before Buying a Home

There are few things more thrilling than buying a home of your own for the very first time. Having a decent savings or down payment on the home is just a small part of the process. Make sure you have all of your bases covered and a solid idea of what to expect during your journey of becoming a proud homeowner. So just what should you know about how to buy a house?

Secure Financing and Become Pre-Approved

It might seem like a better use of your time to find a home to finance before getting your financing in order. Not so, first time buyers should get a financing pre-approval before they start looking at homes to get a better idea of how much ‘home’ and interest repayments they can afford. This will go a long way in narrowing down your property options to more realistic expectations.

Take a look at some of the home financing offers from banks, financial institutions or your mortgage broker. Besides comparing interest rates, mortgage lengths and overall costs, you’ll also want to keep your specific lending needs in mind. For instance, there’s a chance you might need lender’s mortgage insurance. This is also a good time for you to learn more about the specific documents and information you’ll need when applying for financing or pre-approval. If you need help narrowing down your financing options for first home buyers, consider turning to a licensed mortgage broker as they’ll manage all the paperwork and loan application for you.

Research Properties

As you’re waiting for your finance pre-approval to go through, start looking at local properties that you might be interested in. When buying a home for the first time, you need to learn to balance out your wants with your needs. Your dream house may be in a less than desirable neighborhood, or you may be able to get a better deal on a home that’s been lived in (an established home) than you would a home that’s brand new. Additional property options include apartments, villa, townhouses duplexes or vacant land to build on.

When you start looking at homes, bring a checklist with you as well as a camera to take pictures and keep properties and their unique features in order. It’s also a good idea to take note of all pros, cons, distinctive features and prices of homes as you tour them. First time buyers have to be careful that they don’t become so caught up in the excitement that they neglect one of the most important lessons of how to buy a house: stay organized.

You can download a Property Inspection Checklist here.

Have a Conveyancer or Solicitor Look Over the Contract    

It’s in your best interest to have a conveyancer or solicitor look over your contract of sale before you sign it. Both will be able to help you better understand what it is you’re agreeing to and everything that’s contained in the contract. While you can always attempt to learn some of the real estate contract definitions and phrases on your own by going online, it’s better for you to rely on the experience, education and opinion of a qualified professional. Another good reason to have a conveyancer look over the contract is that you’ll be covered with professional indemnity insurance in the event that things take a turn for the worse.

As you’re deciding on a solicitor or conveyancer, ask for references from past customers, ask about the level and type of services provided, and get a quote for their services. Have an informal interview with each candidate to get a feel for how they work and to see how much they can truly help when it comes to buying a home.

[Recommended: Why should you do a Contract Review?]

Have the Property Inspected

While your solicitor or conveyancer is looking over the contract, have an experienced building inspector inspect the property. The Housing Industry Association and ArchiCentre are two home inspection companies that can help first time buyers determine if there are any problems with a property they’re thinking of purchasing or ask for a referral from your Mortgage Broker for a good building and pest inspector.

If there are any issues, talk with the seller to make sure he is aware of them and see if he plans on taking care of the problems before you sign any contracts to buy it. Check to make sure the problems have been taken care of before you move in, otherwise you may become liable for them. In the event that you’re responsible for fixing any issues with the property, find how much they’ll cost to fix, the type of materials that will be used, if the materials or work is under warranty and how long the job will take.

Tip: You should try to negotiate down the price based on any defects on the property.

[Recommended: When should you do a Building and Pest Inspection?]

Negotiate or Attend an Auction

When it’s time for you to make an offer, you might need to enlist the help of a buyer’s agent to assist you with negotiations and teach you how to buy a house without offering too much. Bear in mind that if you purchase a house at an auction you’ll need to exchange contracts and offer up a 10% deposit on the day. If you aren’t buying at an auction, you’ll most likely have to put down a small holding deposit as a gesture of good faith before you make a 10% deposit once contracts have been exchanged.

Outside of auction condition, after you make an offer, it can be accepted, rejected or negotiated. Bear in mind that any offer you make isn’t legally binding until a Contract Note or Contract of Sale has been signed by both you and the seller. Once your offer is accepted, inform your financier as well as your solicitor or conveyancer of the date of settlement.

Tip: For first timers, we would always try to include the subject to finance in the contract.

Tie Up Loose Ends

Before you start popping champagne and celebrating buying a home, make sure you get your financing, deposit and settlement ready. Once you receive your mortgage statement and title deeds, it’s time for you to pay your conveyancer or solicitor legal fees and any utility adjustments you owe at the time of settlement.

Additional costs to bear in mind as part of the sale include stamp duty, land title transfer fee, home insurance, moving costs, utility connections, cost of renovation and council rates if you’re moving into an apartment. It’s always best to give yourself a bit of financial cushioning before, during and after you move in so that you can enjoy your home and still have money for all of your other financial obligations.

Tip: Your mortgage broker should factor all these considerations and settlement occurs in when applying for the loan.

[Recommended: So you’ve bought the property… What’s Next?]

Once the final inspection is complete and all of the paperwork has been signed, you’re ready to get the keys and move into your very first home. Congratulations, you now know the steps to take when buying a home.

ps: If you would like to get assistance in this process, book a free one hour no-obligation appointment with us!