Buying your first home is exciting, it’s overwhelming, it’s incredible, it’s scary, it’s a sense of accomplishment and it’s likely one of the biggest purchases you are likely to make. It can, and often at times will feel like a bit of an emotional rollercoaster, but there are things that you can do to prepare for the emotional journey ahead.
Besides the sheer pride of homeownership, buying a home will help you achieve financial security and stability, allowing you to contribute to your own net worth (not someone else’s).
The key to an enjoyable and stress-free home buying experience is to arm yourself with as much knowledge and information as possible – be an educated buyer.
Below is a list of common mistakes that first home buyers make (but YOU don’t have to).
Not shopping around for a competitive home loan
Even though saving for your home loan deposit might seem the most challenging part of buying a home, the hard work doesn’t stop there. Next step is finding a reasonably priced property and securing an appropriate home loan that suits your lifestyle and financial position.
The most expensive mistake that a lot of first home buyers make is to get a rate quoted by only one lender. As overwhelming as the home loan process can be, it pays to shop around and having those two or three additional quotes could save you thousands over the life of your loan. A good idea is to look for a home loan option that gives you flexibility and will ultimately cost you less over the life of your loan.
To note: It is important to know the difference between getting quotes (researching) lenders and actually applying for a home loan.
It’s not advised to submit multiple home loan applications – each time you submit a home loan application it will show on your credit report (which can be accessed by any financial institution). Having multiple applications in at once is somewhat frowned upon by lenders and may make it harder for your loan to be approved.
If you’re unsure about which loan/lender is best suited to your situation, consider engaging the help of a professional to guide you through the process from reviewing loan options, pre-approval, loan applications and all the support you need to better understand the process.
Good practice would be to get quotes and research multiple home loan options first, compare all your options and choose a lender that best fits your circumstances and then apply for a loan with that one lender.
Not getting pre-approval
Before you start visiting open houses and dreaming of how you’ll decorate your new home, make sure that you have the backing of a lender that’s willing to help you make your dream a reality. Getting pre-approval for a loan is not mandatory but it is quite a valuable step in the home buying process. A loan pre-approval means that a lender has agreed, in principle, to lend you an amount of money towards the purchase of your home.
Usually, when a lender pre-approves you for a loan, they will do so for a specific amount, so you can focus your house hunting on the properties you can afford. Getting a home loan pre-approval gives hopeful home buyers a realistic budget to work with, allowing you to narrow your search and negotiate with certainty. Save time by looking at a home you can actually afford.
A particularly significant benefit of getting pre-approval from a lender is that it puts you in a more favourable position with the seller by showing that you are serious about purchasing a home and also that the particular home is within your budget. This automatically assures the seller that you are not a tyre kicker.
Quite simply put, home loan pre-approval validates your credibility to the seller – this could be the difference between your ideal home becoming yours or someone else’s. So, if you are serious about getting out of the rent trap and want to get into your own home sooner, don’t miss out on the opportunity simply because you didn’t exercise due diligence by getting pre-approval.
It is always good financial practice to air on the side of caution and give yourself an adequate financial buffer for unexpected costs that may arise (pre-approval gives you this clarity to allow you to budget accordingly).
When building a home with reputable builders like Ausmar Homes, the team walk you through the entire build process and inform you of all costs involved from the beginning, so you have no nasty surprises.
Not planning for the true cost of buying a home
A big mistake that many first home buyers make is to underestimate the increase in expenses when they go from renting to owning. These additional (or hidden) costs manifest in two stages;
- During the home buying process
Buying a house is not just about paying the price of the home, there are some additional costs that home buyers need to be aware of before you even move into your new home, this depends largely on the value of the home you purchase and includes but is not limited to;
- Loan application fees
- Conveyancing and legal fees
- Mortgage registration fees
- Building and pest inspection fees
- Stamp duty (depending on the price of the property)
- Lender’s mortgage Insurance (if applicable)
- Over the life of living in your home
It’s not uncommon when going from renting to deciding to buy a home that many first home buyers purchase a home that is bigger than the home they have been renting, with this bigger home comes increased costs – utilities, insurance and ongoing maintenance
In order to stay on the front foot (and avoid any surprises) when you decide to buy a house, it’s important that you budget not just for your mortgage repayment, but for your total monthly expenses before you start searching.
Not doing the recommended inspections
It’s these small investments at the start of the home buying process that can save you the biggest headaches. Buying a home is a huge financial decision (and the biggest single purchase you’ll make) so naturally you’d want to be sure that your investment is structurally sound and conducting professional building and pest inspections is how you can assess this.
A thorough inspection can expose costly problems ahead of time and can save you bucket loads of money down the track, fully knowing the state of the house can also help you in negotiating with the seller for either a better price or to have the repair costs passed on to them directly.
If the uncertainty and risk of buying an existing house is more stress than benefit, building a brand-new home (as opposed to buying existing) is a way to significantly reduce the financial risk of having to deal with maintenance and potential repair of an older building and also gives you peace of mind on the structural integrity of your home.
Letting emotion take over logic
No doubt you’re going to experience a range of emotions when you buy or build your first home, and rightly so – it’s a significant milestone! But don’t get too caught up in the emotion during the process, this is where you need to be at your most sensible.
As soon as decisions are led by emotion, you become blinded to any red flags like over extending your budget, overlooking significant structural problems and even buying impulsively and suffering buyer’s remorse. Having a professional to guide you through the process is key and will ensure that you get the perfect home for your lifestyle and your ROI (and that’s a first home buying experience done right!).
There is no single way to get into the property market and a wide range of options are available to first home buyers and much like all things in life, there is no quick fix if your home buying process doesn’t go as planned. So be sure to align yourself with experts in the industry who can help you navigate the process.
Getting a foot in the property market doesn’t need to be an impossible dream, you can now have an Ausmar Home to call your own with a deposit as low as 10k. This exclusive first home buyer solution gives you the opportunity to build a brand-new home with Ausmar Homes and all you need is;
- To have a solid rental history, even if it’s as short as three months,
- To be able to qualify for the state governments first owners grant and
- To have a clear credit history
Ausmar Homes first home buyer’s solution (as with all our home builds) is backed by honesty, integrity and transparency throughout the entire build process.
Simply contact our First Home build specialists and we’ll be in touch and have you on your way to owning your first home sooner than you thought.