Many people dream of owning their own home. Getting a foot on the property ladder is much more difficult than it used to be. Mortgage lenders have a very strict set of lending criteria and house prices have risen much faster than salaries for many years.
Though buying your own home is more complicated (and expensive) than it used to be, there are still things you can do to make your first property buying experience go much smoother.
Do your research
Unless you know the housing market and something about home loan borrowing, then the expectations of your first property might not match up with reality. How much can you afford to spend, and what will that buy you?
The area you choose to buy in can also have a massive impact. Get to know the areas you are looking to buy in and what the house prices are like. Often, just looking a little outside of the area can get you much more for your money.
Assess your financial situation
There’s no getting around it, house buying is expensive. Between deposits, mortgage repayments and legal fees, there’s a lot to consider. Plus, due to the uncertain economic consequences of COVID, lenders are becoming a lot more cautious about who they are lending to. In fact, the number of first-time buyers in the US has fallen for the last three years
Get an overall picture of your finances and current spending. By doing this you’ll be able to estimate how much money you’re likely to be able to borrow and how you can make cutbacks to save up for that deposit. If you aren’t sure how much you can borrow, visit a site like MortgageCalculator.org or ask your bank for an estimation.
A good credit score can get you a better rate on a home loan so try and polish yours up as much as possible by paying your bills on time and reducing any debt as much as possible.
Most lenders require a depositor of typically between 5-20% of the property value. Add all of the other moving costs on to this and you will definitely feel the financial pinch. Starting to save as soon as possible is the best way to build up your funds. Cut out all unnecessary expenditure and set yourself a realistic budget to stick to.
Look at ways to make any additional money through extra hours at work or a side hustle. Every dollar you can save up will make buying your first home that much easier.
Find a good realtor
Realtors are the experts. They know more about the housing markets and areas than you ever will. If you know the area and type of property you are looking for, your realtor can represent you and keep their ear to the ground, finding great potential properties and negotiating a good price for you.
Buying your first property is by turns expensive, nervewracking and exciting. Getting the right property for the right price is possible, you just need to do your research and commit to saving as much as you can in order to get a good interest rate.