Thinking about buying your first home?
Just stick your toe in the water, it’s OK.
Let’s Get Real: (Part 1)
So, if you are about to buy your first home and haven’t put your toe in the water yet, here are some realty reality checks for you to help smooth out a few of the bumps.
Q. I am thinking of buying my first home. What would you suggest I do first?
A. Having a chat to your local bank loans consultant or a broker is potentially the best starting place. You have a wealth of information available to you on line but nothing beats ‘getting up close and personal’ with someone to answer those particular questions you may have. It will help avoid confusing information if you are starting out. While most situations are straight forward, your personal situation may have something unique about it that could add a bit of a twist. If you build that relationship, it will make some of the following steps just that little bit easier.
Don’t know who to talk to? Ask family, friends or work colleagues about good experiences they have had. Your mission is to find out about your capacity to borrow. How much deposit do you really need? What costs are involved in actually setting up your loan? You will waste less time if you are going shopping within your means rather than in dreamland. It doesn’t hurt to have dreams but keeping things a bit real means they are more likely to come to fruition.
Q. Why do you think I should talk to a financier first?
A. The main reason is we often set out with those rose coloured glasses on and that can lead to disappointment. If you have established a relationship with someone in the finance sector, you will be able to bounce scenarios off them when you see that gorgeous house or unit you just have to have. They can help you work out what suits your situation the best and also help you move more confidently with an offer. With some rapport in place, you will also be able to take action more quickly when that special property tweaks your interest. A seller wants to sell so if you have not done any homework about your financial situation, you will not be in as strong a position as someone who has. A pre-approved buyer looking for their first home will be able to offer more confidently than you will and while you may make a better offer, there is nothing more disappointing than having your contract crash due to inability to get finance.
Q. I have a loan already for my car. Do you think that will have an effect on my ability to get a home loan?
A. I am not in the finance industry but I would definitely check this one with your ‘new friend’, whomever you have been speaking to about your borrowing capacity. I know from personal experience that it is likely to be considered as part of determining your capacity to borrow to buy your home. Get clear on everything to avoid nasty surprises later. Clients have told me various stories and it can also get ugly when credit cards and store cards get a bit out of control so ask about these too. Is it time to chop some of them up? I have been known to freeze one of mine years ago to avoid using it. Worked well for about 6 months but then I weakened when a bargain was to be had!
Q. I love shoes. Surely I don’t have to give them up?
A. I’m with you on that one! It may be time to cut back on some of those little extras that seem so innocuous at the time but eat into your savings. Do you really need that new pair of shoes or that second coffee every day? That extra bottle of wine? Is it time to suggest the party animal inside you take a more moderate approach? That’s a bit boring, isn’t it but if you are serious, maybe it’s time for some changes. It’s a bit like the story of how do you eat an elephant? One bite at a time! An oldy but a goody, I know, but every little change you make will bring you closer to your dream.
Q. Are there any other tips you think would be useful?
A. Develop good habits if you are serious about buying your first home. This is likely to be where a solid savings history will stand you in good stead with the financiers. This is purely practical advice but I am sure you financier/broker will corroborate this. It may be time to set up a separate account so that you can squirrel away some funds. Out of sight, out of mind usually works for me. Maybe that will work for you too.
Q. I have just realized that I own some furniture and my car. Is that going to count for anything?
A. I just look at it this way – you want to put your best foot forward and these are things that in my experience have counted as pluses. Your financier will conduct an assessment of your situation to find out about all of those things. Unless you have been very fortunate and received an inheritance, a glaringly obvious plus would be a steady job!
I hope these practical pointers lead you in the right direction as you take your first steps out as a House Hunter. Don’t forget to send me through any first home buyer questions here or on our Facebook page and I will answer them for you. If they are tricky finance-specific questions, then you will have to save them for your broker.
In part 2, Let’s Get Real: A Q and A realestate reality check for buying my first home, I will look at commonly asked queries relating to what happens when you are out and about and start to get serious about your first home. Things to consider in your search! What happens when you want to make an offer!
So, take a deep breath and enjoy the experience. The best advice I can give you is ‘Ask questions’.
Want to Know More? Check out Our Home Sellers Checklist for getting the best result on the Sale of your home.