SPEAKER: I’m glad you could all make it to our Home Buyer’s Awareness Programme. Today we will walk you through the process of finding and buying your very first home.
The first step towards homeownership is saving money for a deposit. Mortgage lenders require at least 5 percent of the amount you are borrowing as a deposit. And 5 percent is actually on the low end. More realistically, you need to pay 10-20 percent of your home’s total cost up-front and in cash. Keep in mind as well that the higher the deposit, the lower the charges and interest rate for your mortgage. Those who take out loans for more than 80 percent of a property’s value pay a lender’s mortgage insurance fee in addition to regular charges, and that can range anywhere from $200 to $500. Definitely something to avoid if possible.
So, once you have your deposit saved up, it’s time to start looking. I have to be honest with you...this is the part where most people make mistakes. People tend to have unrealistic expectations about finding the ideal first home, which is not going to happen. By following a few simple strategies, you can avoid some of the pitfalls of first-time homebuyers.
It’s crucial to remember that your first home is merely a starting point. People tend to look for the best neighborhoods right away. They assume that buying in a highly sought-after area will make it easy to sell the house later on, but that’s not the case. Competition is tough for both sellers and buyers in those areas, and prices are often very steep. So, it’s better to buy in a less ideal neighborhood that has potential for growth.
I’m not suggesting that you settle for somewhere far below your expectations. It still has to be a neighborhood that meets your basic needs. The point is just to keep in mind that a person’s first home is merely a foot in the door.
So what kinds of qualities should you look for in a neighborhood? For one, any neighborhood with high resale value is going to be accessible by public transportation. Secondly, you want a area with good schools. Most families buying homes have children, so keep primary education in mind. And, of course, there should be basic facilities such as shops, restaurants, and grocery stores.
Now, here’s an additional insider’s tip... Some residential areas are zoned for commercial development, meaning that it is possible to construct commercial properties there. If a neighborhood is commercially zoned, there’s a good chance the city will develop the area at some point. Finding a residential area that is underdeveloped but has been commercially zoned is usually a safe investment.
Of course, the quality of the house is just as important as location. I like to recommend that first-time homebuyers get a builder’s report on any property they are seriously considering. This involves an experienced builder inspecting the home for potential problems. It only costs a few hundred dollars, and can save you a lot of grief down the line.
However, if you don’t go that route, there are some things that even the untrained eye can catch. You want to look for signs of dampness or cracks on the walls and floors, drafty or jammed windows, and poor insulation. You also need to check to make sure all of the taps, showers, and toilets work.
Once you have decided on a home, the next steps are to find a mortgage lender and hire a lawyer to handle the conveyance. Take time to shop around for a good rate for your mortgage. Banks and mortgage brokers are highly competitive, and with some effort, you can find the right deal. When that’s settled, the lawyer reviews the sale agreement and mortgage paperwork, and then facilitates the conveyance of the property title into your name.
I’ve given you a very general overview just now, but throughout the rest of the day you’ll hear...