Buying your home should be an exciting and fun experience. This will probably be the biggest investment that you will make in your life. That is why it is of utmost importance that you are informed and well educated on the topic. In this article I will give the steps into buying your first home to make sure that the process is smooth and successful.
Make sure that you get pre-approved for the maximum purchase price before you start looking for a new home. We have seen many cases where people found their dream house, make an acceptable offer and then find out there is something wrong on your credit report thus causing problems and delays on your purchase.
Shop within your budget. Your bond originators can quickly determent the amount which you can afford by looking at your income and debts.
Make sure that you shop around for different neighbourhoods and homes. Don’t be put down if you can’t find a home on the first day of shopping. Finding your dream house will take time and you should take your time.
As soon as you have found a home, then you should make an offer immediately. Don’t delay.
Carefully select your loan program and lock the interests. It is of utmost importance that you select a loan that suites your financial and personal needs. You should also know that the interest rate can change on a daily basis, so I would strongly suggest that you lock the interest to prevent you from paying more.
It is very important that you schedule a home inspection. Make use of a licensed real estate inspector and a pest inspector. Make sure that you receive a written report on the state of the home.
Insurance is very important. I would suggest that you apply for a quote about two weeks prior to the closing date, so that the insurer have enough time to calculate the quote and that you can be covered in time.
It is a good idea to consider a home warranty plan. This is a form of insurance that will cover you for almost anything that breaks in the house. Normally these warranties are valid for two years after the closing date.
It is important that you plan your move well ahead of time. Contact numerous moving companies to get the best possible deal.
Most importantly, you have to enjoy staying in your new home. Homeownership can be one of your biggest achievements in your whole life, so be informed and involved and start living your dream.
Important pitfalls to avoid
We have seen many cases where homebuyers get caught up with hassles and problems because they were not informed and educated on the home buying process of South Africa. Next I will list a few mistakes which one should avoid:
1. One of the biggest mistakes is that people do not determent the correct budget for their homes.
2. Fail to make practice payments prior to owning a home.
3. Not obtaining a pre-approved mortgage before starting with the house hunt.
4. Not using a well reputed and professional real estate agent.
5. Don’t be fooled into a mortgage plan which gives you the idea that you will get lower interest rates and payments.
6. Do not go look at a home without your real estate agent.
7. Do not apply for additional credit or loans after you have been pre-approved for the home loan.
8. Do not make a buying decision based on emotion, rather than on information.
9. Not having the home properly inspected by a professional home inspector, even if it is a newly constructed building.
10. Not having home insurance at least two weeks prior to the closing date.
11. By using the builder or the seller’s requested title company.
12. Making large amounts of deposits in the early stages of your home ownership.
Make sure that you avoid these pitfalls in order to make the buying process as smooth as possible.
Establishing a realistic budget
The most common mistakes which South African home buyers make, is that they fail to establish a realistic budget. They jump into buying their new home without knowing what impact your mortgage payments will have on your finances and day to day living.
It is clear, that by not having a realistic budget, will cause stress on your finances and in the household, and that is totally unneeded. The best place to start with your financial planning is with your household budget. You should know that a budget is not only a list of expenses, but an agreement between the people who has access to the household fund, that they stick to the spending limits which was established. When a proper budget is set in place, then you should be able to see whether you can afford a mortgage payment every moth without it affecting the quality of your lifestyle.
Choosing a neighbourhood
It is clear that when buying a home then you also buy part of the neighbourhood. The two cannot be separated. It plays a big role in the home buying process in South Africa. You should know that if the price of property is falling in a neighbourhood then the chances are good that you will get a lower offer. I would suggest, if possible, that if the property prices are sky high, then to spend a little more if you can.
It is important that you know that neighbourhoods have personalities. Talk to people, and ask them what they think of the area and what they like about it or dislike about it. Always remember that input from people are always better than written reports.
In conclusion. Being armed with this knowledge will certainly make the house buying process a lot easier and more comfortable. Remember that it is of utmost importance that you educate and inform yourself on the topic of real estate. Knowledge is power.