Twenty tips when buying your first home

1. Know your credit score

Your credit score is one of the biggest factors in what your house loan terms will be. Know your score before you ever try to get a loan and take the time to repair it as there will be errors (four out of five credit scores contain errors). Noticed a small mistake? No problem, go ahead and dispute it. Seen a ‘bad blemish’ on the report? Time to start repairing it now before it’s time for the mortgage application.

2. Reduce all existing debt

If there is one lesson to be learnt when applying for a mortgage, try to pay off as much of your credit card debts, student loans and other types of debt before you start with the mortgage application.

3. Have a lender pre-approve mortgage amount

Get a pre-approved mortgage amount from your bank or from the banks contacted by your mortgage broker. In fact, it is one of the most important parts of the home buying process. Pre-approval means you should be able to get the loan as long as nothing changes with your financial situation or your credit score.

4. For your first mortgage shop around for the best mortgage deal

This is one of the biggest mortgage mistakes many first-time home buyers make! The bank you are with may not be flush with a mortgage fund, they may also appraise your risk slightly differently than another bank who wants to have more mortgages on their books. Thus, you will get different offers.

5. Know what you want from your first home – a property with land

As I have already mentioned in ‘Have a treasure map to give your life direction’ and ‘Use the law of attraction to turbo charge your life’ visualization and NLP are powerful tools. So, when looking for your first home, or your next one, set out a list of ten must haves and ten would like to haves. Find pictures in magazines of houses you like and put them on your treasure map.  A checklist comes free as an electronic template

6. Select the neighborhoods you are interested in

Understand you are not just buying a home but a location as well. One of the key considerations that many buyers miss when purchasing a home is knowing how to pick a neighborhood they will love. Often first-time buyers focus too much on the house and not enough on the neighborhood.

7. Do not change jobs mid-application process

Even if you dislike your current job do not change jobs until you’ve closed on the home loan. Financial institutions prefer to see a career history, which shows consistency. Unfortunately, changing jobs mid-way through the process will delay the application process. If you move from a salaried position to self-employed you will end up in trouble as they will want to see your first year’s earnings, as submitted to the tax authorities, before engaging in a mortgage conversation.

8. Understand the property cycle

If everybody wants in, houses are frequently auctioned for over 120% of the reserve and during viewing it is crowded, you are at the peak of a property cycle.  Buying now could take seven years before the house value comes back to what you paid. Always better to buy when there is doom and gloom around.  

9. Verify all information in the listing

You need to verify that all the information given about the home is right. Sometimes real estate agents put things in the listing that they may not have verified or may just not be aware of the facts. Some of the more common issues that can crop up in a real estate transaction are understanding what stays with a home and what doesn’t. Many buyers, sellers, and even some real estate agents do not know what is considered a fixture (stays with the house) and what is personal property.  

10. Try to see yourself in the home

Sometimes when you view a home, it will be filled to the brim with the current owner’s possessions. Learning to see past the clutter to the potential of the home will open the doors to better deals.  

11. Get the house checked by a reputable builder

Select a builder from recommendations from your friends. The builder maybe be needed to do some alterations if you purchase so you have ‘killed two birds with one stone’.   A checklist comes free as an electronic template

12. Get a methamphetamine test done on the property

The surge in P-contaminated (methamphetamine) homes means that you cannot chance it unless the house has been a family home for the last few years.

13. Review of all property records at the local council

In New Zealand you can get a document called a ‘Land Information Memorandum’ which identifies any issues with the land the house is built on, such as drainage and landslip risks and includes copies of all plans filed with the council.  A checklist comes free as an electronic template

14. Talk to the neighbors

If you are keen, come back to the neighborhood without the agent and knock on two or three neighbors’ doors and indicate your interest in the property and ask:

• What is the neighborhood like to live in?
• Have there been any boundary disputes?
• Is there anything about the house we should know about before we buy?

15. Understand all the Body Corporate (Homeowner Association) regulations

Apartments have shared assets (grounds, entrance ways, roof, lifts, staircases etc.) and the maintenance is managed through a Body Corporate (Homeowner Association). Some developments have other regulations are attached to the property such as no pets, no long-term renting, no guest parking overnight.  

16. Schedule your final pre-purchase walkthrough

A final walkthrough is a standard practice of walking the property before closing to make sure that there are no new major issues with the property that would prohibit you from purchasing the home. A checklist comes free as an electronic template

17. Know every cost associated with ownership

There are a lot of fees that come with a home purchase above and beyond the mortgage.  A checklist comes free as an electronic template

18. Never buy your first house in an auction

The reason why agents love auctions is that you, the buyer, cannot put any conditions of sale in the deal. You have to pay a lot of costs (builders report etc.) and have a small chance of being successful at a good price.

19. Negotiate a deal

Once you have processed through all of the homes that you are interested in and have found the home that you like the most, which may be the first one you see.

It’s time to move on to the next step putting in an offer. This is where all of the details of the transaction are documented and signed by both parties through written contracts. You should seek advice from your lawyer as they might suggest a caveat or two.  

20. Don’t be romantic, get a flat mate

Often you are very stretched when buying your first home. To make ends meet get a flat mate in to help you over the first couple of years.  

The checklists comes free as electronic templates when you buy the series. Visit patstormbooks.com to purchase the ebook.