Introduction

It sure is very exciting to buy the first home for yourself or your family, but it can be quite a daunting task, and real estate agents definitely don’t make the process any easier. When you have never seen the procedure before, it can be confusing. Not to worry, give this article a read to clear most of your doubts; and then you can freely go off to the market to find a home.

The factors that you should consider before buying your first home

When you buy your first home, inevitably you will be spending a lot of money and will be tied down with loans for years, and so most likely you will be doing it only once. Hence, you need to make sure that you go through all that trouble for the right house.

Step 1: The pre-consideration about the house

Plan everything before you buy your house so that you don’t regret it later. Especially if you are buying your house with a partner, you should discuss every single requirement as well as your future in the house together in practical terms and only then make a decision.

• Set your budget:

Below are all the costs that you will have to bear while buying your home. You need to keep all these in mind while setting a budget. It is always advised to stay within your affordability of spending as well as borrowing while buying a home as new unexpected expenses will eventually occur.

• Purchase price: This is the actual price of the property. Great if you can deposit the whole amount at one time, otherwise, when you take a loan, your down payment will be a minimum of 10%-20% of the cost.
• Loan application fee: This is the one-time fee while applying for a loan. The amount may vary depending on your lender.
• Lender’s mortgage insurance: In the case where you have deposited less than 20% of the cost, you may be required to pay this fee, which acts as an insurance in case you cannot repay your loan.
• Government fees: Depending on the location of your home, the state and territory governments levy a stamp duty or property transfer tax. Mortgage registration and transfer fees also apply and differ from state to state. Although, some states provide some concessions in this. It’s often worth researching what’s on offer in the area where you’re buying.
• Legal and conveyance fees: These are fees for your real estate agent.
• Building, pest and strata inspections: These are optional expenditure, but will do good for you down the line as you will be able to determine all potential issues with the house.
• Moving costs: You might have to hire a truck or movers to shift you to your new home.
• Home insurance: Home insurance will cover the cost of rebuilding or repairing your home if an unfortunate event befalls it.
• On-going expenses after buying the house: Your expenses don’t end in simply buying the house, you might have to spend a lot more after. If you have taken a loan, you will have to keep on making repayments until the course is complete. On top of that, moving into a property might necessitate you to pay for owners’ corporation fees like communal properties, council rates, utility costs, building and contents insurance, and things like home improvements.

• Features you want in your home:

Make a list of all the features that you want in your home since this is going to get added on to your ongoing expenses. Talk to your friends and relatives who own houses, and figure out if and how many of the bedrooms, bathrooms, office/media/game/guest room you want, if you want an open or a closed floor plan, what kind of tilings you want, whether you want a fireplace, and the like. You can categorise these into “must-haves” and “nice-to-haves” to make a more feasible decision.

• Size of your house:

Before you buy your home, you should know if in future you would want kids and how many so that you can decide on the size of your home and your renovation and/or expansion plans accordingly.

Step 2: The house hunting begins

Once you have decided what kind of house you want, you start looking for a suitable place. The location of the house you choose will depend on a number of factors – if you like the city life that is bustling all the time or if are looking for a quiet and peaceful home, if you want it to be close to your workplace, which schools you to want for your kids, what kind of neighbourhood you imagine yourself living in, and many more. Research well about all your requirements; this is not a matter you would want to compromise on.

Step 3: The inspection

Before you place a bid on a property, it is highly recommended that you get the property inspected for any issues, including a pest problem. This one-time investment will save you a lot of expenses down the line.

Step 4: Arranging for the finances

The financial arrangement is the most complicated, yet the most significant part of the house buying procedure. However, in some states, the government offers a few concessions for first-time homeowners. You can apply for the “first homeowner grant” or “first home super saver scheme” if you meet the eligibility criteria and save some money on the purchase. Either way, for the rest of the cost, most possibly, you will have to apply for a home loan in Melbourne.

• Get pre-approved:

Before you apply for a home loan in Melbourne, you need to have a pre-approval letter for the mortgage which will show the maximum loan amount you qualify for, so you know how much you are eligible for. All you have to do is contact a lender and submit the past two years of tax returns, paycheck stubs and w2’s, last 2-3 months of bank statements. He/she will verify your income and draw up your credit report to make sure you qualify for the minimum credit requirements.

• Research and assure the best home loan in Melbourne for you:

Depending on whether you’re after a basic package or one with extra features, home loans can vary greatly when it comes to interest rates and fees. Examine both the interest rate and the comparison rates to compare loans more accurately. Below we have mentioned a few of them.

• FHA loans are the most popular home loans for first-time buyers as they are really easy to qualify for and offer a down payment of as low as 3.5%. They also have the lowest credit score requirement of any mortgage – just a 580. However, a drawback of these is that they cap out at $275,000 in low-cost areas of the country.
• You can opt for conventional loans up to $424,100 in low-cost areas, but they require a credit score of 620 and a down payment of at least 5-10%.
• If you are veteran, you can apply for VA loans which require zero down payments and mortgage insurance.

• Compare best home loan rates in Melbourne:

Home loan rates vary from lender to lender, just like closing costs and other fees. All mortgage companies are obligated to show a loan estimate to the borrower which will break down all the costs associated with the home loan. So you should compare at least three lenders and negotiate to ascertain the best home loan rates in Melbourne that will suit you.

• Keep your credit score in check:

When it comes to being approved for the best home loan in Melbourne, your credit score matters the most, so it is critical that you don’t let anything ruin that for you. Avoid applying for any new lines of credit or loans, or open new accounts before you apply. These drag your credit score down which takes over a few months to build back up.

Step 5: Taking care of the legal issues

Real estate laws are different in every state. While real estate agents can help with basic documentation, it is a good idea to involve your own lawyer. They will make sure you don’t get mixed up in any other legal trouble. He/she will also remove any illegal or unfair inclusions in the purchase contract or at least make you aware of any such clauses if they exist.

Conclusion

When you are a first-time buyer, obviously you don’t have experience at your disposal, so you will need to conduct your research in as much depth as possible. After you have followed through every aspect of the house buying procedure, only then you should make an offer – and make certain that this offer is always less than what you can actually afford. Have a list of homes which you are willing to negotiate for, never put all your balls in one basket. In any doubt about your financials, never be shy to take assistance from experts in the field who will guide you towards finding the best home loan in Melbourne.