Buying a property for the first time can be a little bit overwhelming. Even with guidance from an experienced and personable real estate agent, you’ll still be learning the ropes right up until the moment you sign on the dotted line (and beyond).
Buying your first home is almost always going to be the biggest transaction you’ve made in your life up until this point, so it’s important you’re aware of some rookie mistakes that are best avoided.
Here are 4 things that we think all first-time buyers need to know before they commit to a purchase and sign on the dotted line.
1) Don’t Take The First Mortgage You’re Offered
Applying for mortgages is no one’s idea of fun. Long forms, personal questions, and hours spent in and out of banks talking about huge sums of money and decades of your life is, quite frankly, exhausting.
When you get your first approved offer from a lender, it can be tempting to be satisfied to take what they’ve offered - especially if it’s a reasonable rate. However, it’s almost always a good idea to continue shopping around. A little extra effort at this point in the process can literally save you thousands of dollars over the long run if you find a better deal than what you were originally offered.
We recommend using a LOCAL mortgage lender. Visit our preferred vendors section for a few we know and trust to provide the best service to you.
2) Don’t Go Out Of Your Comfort Zone
Just because a bank is willing to lend you $400,000 doesn’t mean you should borrow that much. It’s all too easy to get excited about the total amount a bank is willing to trust you with and start looking at more extravagant and attractive properties while overlooking the monthly repayment costs slightly.
If you don’t have much of a “buffer” between the amount you’re paying back each month and the maximum you can afford to repay, you’re heading for trouble. Unexpected costs are a part of home ownership, and you need to be sure you’re going to be able to handle additional expenses (property related or otherwise) without threatening your mortgage repayments.
3) Don’t Destroy Your Savings
If you’re like most first time buyers, you’ll be trying to pool your cash from all kinds of different places to get the biggest deposit possible. For many people, the magic number is 20%, when you hit this amount you usually don’t have to purchase mortgage insurance as a condition of the lender offering the finance (which can lower your monthly repayments by a not insignificant amount).
However, 20% of the value of a property is often a huge amount for first-time buyers who have no equity built up in a property to utilize. This means you’re probably going to be destroying your savings to reach 20%.
If you lose your job or have another unexpected financial burden, you’re potentially going to be unable to make your repayments due to having no savings, and you’ll be uninsured.
Needless to say, if this happens, you’ll be pretty upset with yourself for pushing your savings too far to avoid taking out compulsory mortgage insurance (that you now need). Try and keep at least 3 months (preferably 6 months) of living costs in your savings to protect you from tough times.
4) Don’t Forget To Have Fun
With the huge sums of money being discussed, and the almost lifelong commitments you will most probably be making - buying your first home can, unfortunately, become a stressful process for some people.
Surround yourself with experienced, trustworthy professionals, and take a step back from time to time to take it all in…
Because with the right advice from the right people..it’s a whole heap of fun!
Are you looking to purchase your first home? We'd love to assist you during this exciting time in your life! Contact us today at 912.737.2935 and be on the lookout for our next Home Buyer Seminar as we have an open discussion and provide valuable information for first time home buyers!