6 COMMON QUESTIONS ASKED BY FIRST-TIME HOME BUYERS
Buying your first home can be both exhilarating and terrifying at the same time. If you are feeling overwhelmed, know that you are not alone. Navigating the world of property and property finance for the first time can be overwhelming. The best way to overcome this is by asking all the right questions.
To help make the home buying process easier for first-time buyers, we’ve answered 6 of the most important questions you may have at this point…
1. How much can I afford?
Before you can even think about how many bedrooms you want, or if you need his and hers bathroom sinks, you need to know what you will be able to afford. That’s why it is a good idea to get prequalified through a bond originator like BetterBond. This will help guide you towards a new home that you can actually afford. There are several online bond calculators that you can use for free to determine roughly what bond amount you might be able to qualify for, but getting an official pre-approval certificate can help you prove to sellers that you are a serious buyer.
2. Does my credit score matter?
Your credit score is one of the most important factors in your home buying journey. Banks will check this score to determine whether your loan will be approved and what interest rate they will charge you. Your credit score is determined by the Credit Bureau based on your financial history. The higher the score, the better your chances are of being approved. A score of 600 or more is considered to be good, while a 670+ is considered excellent. It’s advisable that if your credit score is too low, take the time to improve it before applying again.
3. Do I need money for a deposit?
Some banks refuse to do a 100% home loan for first-time buyers, which means that you will need to pay a deposit. This will usually be 10-20% of the total purchase price, though you can choose to make it higher. The higher the deposit, the less you will need to borrow, which means your monthly instalment will be less and you could also qualify for a lower interest rate. If you are unable to pay a deposit, don’t worry. There are some banks that offer a 100% home loan to first-time buyers. This is a loan completely funded by the bank, removing the need for a deposit.
4. Are there other costs I need to consider?
As the purchaser, you will be responsible for a number of expenses over and above the purchase price, and it is important to budget for these costs. You will be liable for the bond registration costs which vary depending on the value of the property, a Deeds’ Office registry fee, as well as the costs of sundries, postage and petties. You will also be responsible for paying transfer duty, which is a government tax levied to transfer the property from the seller’s name to the buyer’s name. Don’t forget about all the lawyer fees that will also need to be paid.
5. What type of home should I buy?
This will depend on your unique needs. Are you single, newly married, starting a family or already have a couple of children? Do you need to live close to your work or the kids' school? Do you need a home office or does everyone need their own space? Asking all these questions will help you narrow down what your needs are, but don’t forget about thinking long term. Also consider what your needs might be in the next 5 or 10 years. By compiling this list, the house hunt will be easier.
6. Should I use an estate agent?
It is in your best interest to use a real estate agent, especially when buying your first property. They will help you navigate the property market and the buying process. Aside from showing you properties and helping you find the perfect home, real estate agents can also offer you a host of free advice.
If you are in the market to purchase your very first house, contact your nearest RE/MAX Office to help guide you through the buying process and get you settled into that dream home.