First Time Home Buyers Guide
Things look good for first home buyers, and they should take advantage of today’s housing market.
- first home buyers
With full employment and a strong dollar things look pretty rosy for first time home buyers.
On top of that there is a glut of homes on the market right now, amid the unertainty blossoms home buyeropportunity, with interest rates looking stable, and if anything a little too high.
In short it won’t get much better than this to buy a home. So lets make sure we get off on the right foot.
Don’t buy a new home as your first home.
If you were buying a home 10 years ago, this would not make sense. But things are different today. Land prices are killing new home sales and only people that have made equity in the first home can build new today.
So my first advice to you is to buy a bargain established home. There are plenty to choose from and they are below replacement cost. You get more for less, and in less time.
Constructing a new home has a killer sting to it that knocks first home buyer out of the park. The holding costs. How do you pay rent, and pay for a block of land and then the progress payments as the home gets built. The numbers climb too high for most first home buyers to scale over. As an example if from search to move in a new home takes 12 months to build, that will cost rent for one year. That could be $20,000! Then there are finance holding costs of the land and the progress payments. House and land is now more than buying established so realistically you could save $100,000 all up buying secondhand. And you are a year ahead of where you would be. You’d have paid a year off your mortgage for instance.
Buying a used home is easier and cheaper and you get to move in in 30 days!
Take your time, but don’t dally either.
First home buyers are in a hurry! They want to move in now if not sooner. Buying an established home makes sense on so many levels, no holding costs, immediate possession, gardens are in, what you see is what you get, and no nasty surprises or delays. Its all good news.
Get pre- approved for a home loan is step number one for would-be first home owners.
By getting pre-approval you will establish that you are credit worthy and will know the loan that you can afford. That will rule out you fantasising about homes that don’t meet your budget. Wasting time can cost you money and the ideal home may get sold while you drool over what you can’t afford.
There is a glut of homes on the market now that credit rules have tightened, and have tightened again since January 2011. Expect this to continue into the future. And use it in your favour.
Expect to pay less for your first home. But not much less.
There are more sellers than buyers right now, so first home buyers should expect to get a bargain, within realistic terms. In good times real estate agents were listing homes in the morning and selling them by the afternoon. these days may comeback, but not for a long while. So see what you can get while the getting is good.
Don’t rely on the information provided by real estate sales people
First time buyers don’t realise who’s who in the zoo. Real estate agents and real estate sales people are working for the vendor. Yes they can give you good advice, but they are not on your side. They will use any information you provide to maximise the house price for the seller. That’s their job. Your job is to buy the home for the least amount of money you can. The two aims don’t mix.
First homebuyers need to get professionals on their side
First home buyers should use a lawyer, a mortgage broker and a pest inspector, and building inspector to buy a home. In particular:
Don’t sign anything till your solicitor has viewed the documents.
Have building and pest inspections carried out by independent people. Don’t use the real estate agents recommendations. You are wanting impartial advice, not friends of the person who works for the seller.
Buying a home can be a lengthy and complicated process, so follow the procedures and don’t try to cut corners.
Don’t buy investor dreams or Reno’s
They are only for trades people who know what they are doing and how to cost a project. If you want a home, buy one that is livable today.
Right now there are people trying to sell homes that they have done the renovations on and they have lost money on it. They won’t recover their investment, let alone their time and energy.
Discover what repairs are likely to cost before you buy your first home, and ensure that the price reflects these costs to you.
Is it in the budget, or its off the list
Besides the home loan deposit, you will need to cover:
- Stamp duty,
- Mortgage stamp duty,
- Building and pest inspections,
- Home loan application fees,
- legal fees and conveyance costs and expenses,
- Valuations and title search fees and
- Mortgage insurance.
Factor in around 3 to 5% of the purchase price to cover these other costs costs, depending on your deposit, and the cost of the home, and the state you are buying in.
We all buy on emotion
So these have to be contained and the deal still has to stack up financially and logically.
Ensure the home meets all your stated and must have needs. Ensure the home is well priced and meets your immediate and future needs out at least 5 years. If it doesn’t it may be better to rent.
When you have found the perfect home, sleep on it.
Never rush into anything. Everything looks better the first time you see things.
Come back and check things out in the morning, and don’t be afraid if you spend the extra time and your answer is no.
A good nights sleep with help you clarify your needs, and what you can afford to spend, and when you take a second look, the home may not be as good as it looked the first time around.
Once you pull the trigger, know that you have gotten all the no’s out of your head, and you can move forward happy that you made the best possible first home buyer decision.
