Buying a house isn’t a simple process, and there are several steps involved in actually buying one – which you may or may not be aware of. To ensure that you don’t get caught out, and miss out a crucial part of the process, we’ve covered the 3 main steps to buying a house this year so that you can make your dreams a reality. If your credit score is not where you want it to be, make sure to read this article on how to boost your credit score fast.
1. Budget for a Deposit
The finances are the most important, but equally the most stressful part, of buying a house. Knowing exactly how much you need by a certain date, and how you are going to fulfill this financial requirement, can be confusing. Before you even work out how much money you are going to need to borrow and where you are going to borrow this money from, figure out the deposit or down-payment that you’ll need to make when taking out this mortgage or loan. While saving for a deposit, work out whether there are any government schemes to assist you in saving money and reward you for any money that you do manage to save. If you are a first-time buyer, there are plenty of federal loaning options available that can help with closing costs or your down payment.
Paying a down-payment on your mortgage or loan – which is usually around 20% of the total amount you are borrowing – can mean that you avoid ‘private mortgage insurance’ (PMI). There are some mortgage providers who will offer a lower down payment, and not require you to pay PMI, but the mortgage itself will have a very high interest rate. It is worthwhile saving the money for a deposit now before accepting a mortgage, rather than paying in excess later on as you will have to repay your mortgage at a high interest rate which could work out more expensive in the long term.
2. Shop Around for a Mortgage
Even if you have a house in mind that you are set on purchasing, securing a pre-approved mortgage when you eventually find the house and want to place an offer can make your offer more attractive to the real estate agent. Knowing that you have already secured a mortgage can help you to stick to a budget when searching for properties too. The best advice that you can take away from this guide, is to shop around for the best mortgage for you. Don’t go for the first mortgage quote that you are given by your bank, because the chances are that this isn’t going to be the best deal that you can actually get. Remember that a mortgage is a commitment that you are going to need to be responsible for in the many years to come, so don’t make any decisions lightly and set aside time to ensure that you fully understand any terms and conditions that you are potentially signing yourself up to.
To ensure that you’ve got the best deal available for you, we recommend that you use a mortgage comparison website where the hard work of researching is done for you, and you can see mortgage lenders’ pros and cons in a clear format. However, never underestimate the power of negotiation when contacting banks or mortgage providers directly, as companies are competitive and you can persuade lenders to change their mortgage rates if they know that you are leaning towards choosing a mortgage with a different company.
3. View More Than One Property
Before deciding what houses to look around, drive around neighborhoods in your desired area, so that you can gain an idea of the houses available for sale and whether there are any open house viewings. It’s helpful to actually go for a walk around these neighborhoods too, so that you can get a feel for the area and see what facilities are accessible to you. If you know someone in the area, ask them if they can show you around, and connect you with others in the area so that you can establish links before settling in the area. They may have some useful advice and guidance as to the sort of houses you should look for, and whether there are any streets to avoid purchasing a house on.
When the time comes to actually view properties, keep a note of the features that you like in each house, and most importantly – don’t go for the first house that you view! It’s okay to love the first house that you see, and eventually purchase, but don’t make this decision on a whim. View other properties to compare the first house against, which will provide reasoning for your eventual decision to go with the first property.
Although you are probably desperate to move out and into a new property, keep in mind these three key steps to purchasing your home this year in order to ensure that you are financially stable and can afford the house of your dreams – rather than making it a nightmare!