Zillow, a rental and real estate marketplace conducted a survey in 2014 revealing some shocking results related to first-time house purchasing. 40% of buyers said that they paid too much, or that they should have invested more money, while 38% of them were surprised when they discovered the maintenance cost of their new home. Whether you are buying on your own, or you want to hire a buyer’s agent, make sure you avoid the following.
The good credit report ensures creditors that you are credit-worthy and that they can give you a loan and charge you lower interest rates. The credit report involves the credit history in relation to credit providers, including building societies, other banks, utility companies and telecommunications carriers. Some credit reporting agencies are Veda Advantage, Dun and Bradstreet, Tasmanian and Experian and you can get a copy of credit report from them.
Checking in on your credit report is important for two reasons. Firstly, you can be sure you are ready for purchasing a new house and, secondly, erroneous information is common in credit reports. You can check it once in a year for free. The factors affecting your credit history are late payments (more than 14 days after the payment is due to be paid), too much debt (over the 30 % threshold) and too many credit cards.
Not understanding the house price trends
The House Price Index measures house price trends and identifies the changes in the rates of mortgage defaults, housing affordability and prepayments. The index is especially useful for people who are selling their house so that they can buy a new one. On the other hand, make sure you know the current house price index for different locations as the price may be the same for a small house in the city and a larger one in the suburbs.
First you get a prequalified/preapproved home loan and then you start looking for a house. You should complete both a prequalification and preapproval as they will give you an insight into how much money you can spend. The truth is that sellers usually consider the bids from buyers who have a prequalified/preapproved loan and some of them even do not want to show you the property unless you have it.
A prequalified home loan will not work every time since it is based on your word only. The prequalified letter includes your existing debt, credit status, income and assets, which you send to the lender. On the other hand, a preapproval is official and more valuable to lenders as you give them the necessary documentation so that they can check themselves whether you can obtain the mortgage.
Not obtaining a prepurchase property inspection report
According to the property buyers from Sydney, the benefits of a prepurchase property inspection reports are multifold. First of all, you are familiar with the house’s condition in advance and you get a clearer picture whether you want to buy it or not. In the case of minor building defects, you can negotiate a lower price. Bear in mind that a pest inspection report is not included in a prepurchase property inspection report, but you should have a specialist identify any damage caused by termites. You should also choose a qualified home inspector (a licensed builder, a surveyor, or an architect).
Not working with a buyer’s agent
If you are a first-time home buyer, you should not underestimate the importance of a buyer’s agent. As you can see, there are various factors you should take into consideration and the whole process of house buying may become overwhelming. If you choose to hire a buyer’s agent, he/she will guide you through the buying process, negotiate the purchase and represent you at the auction if necessary.
Researching about current market trends, checking in on your credit report, hiring a home inspector for each house do take time, but rushing into home purchase should be avoided. You do not want to catch yourself filling in the survey you read about at the beginning.