Useful first-timer tips before financing a home
Unless you have a cache of money just lying around unused, chances are you’ll need a mortgage loan to help buy your dream home.
If you’re looking to acquire a new home with financing, you may feel overwhelmed by everything you need to learn about the process. In this article, we will cover some of the things you need to know to get started.
Knowing the full cost of owning a home
Owning a home has four main categories, which includes principal, interest, taxes and insurance.
Principal and interest involve monthly mortgage payment. The principal involves payment of the down of the loan balance monthly. The interest pays the fee for borrowing the money. You can use an amortization calculator to check the principal-versus-interest breakdown. Another way to get accurate loan details is to talk to a broker who can provide a range of options specific to your situation. This is a step beyond a comparison site which may only provide top level info and not have all market options available.
Taxes are the property taxes based on the county you live in, and average 1.2 per cent of the property’s value each year.
Homeowners insurance is a requirement for mortgages and is paid to an insurance company of your choosing. Usually, the cost of insurances ranges from $700 to $1,200 per year for a single-family home.
Assess your credit history now
Having a good credit report is vital to get the best mortgages coupled with low rates. Lenders look for reliable on-time payment history and credit depth. You can be more appealing to lenders provided you have a significant credit amount. If you want to get more credit, take note that your credit score can drop 5-15 points after opening a new account, then will rise after establishing a good payment history, therefore it’s recommended to open new accounts a few months before you apply for a mortgage.
Your planned duration of stay in the home
You must consider how long you want to be in a home to better evaluate the right loan product. If you think that your income won’t grow over time, you’ll probably be in the home longer, so you’ll need a loan with a payment that doesn’t change, like a 30-year fixed loan.
If you expect your income to increase within five years and you want to upgrade homes within that time, you can opt for a five-year ARM, which includes a much lower rate.
Pre-approval and lender requirements
You could be disappointed if you find your dream home and you fail to get pre-approved for a loan. The property market is a competitive place with sellers requiring your offer to be submitted with a lender pre-approval letter that serves as your guarantee with your financing.
Remember that lenders will thoroughly examine all aspects of your life when you decide to get pre-approved. A lender provides a checklist showing what documents they need. Simply follow the checklist exactly.
Buying in the right community and growth locations
Now that you know the basics – the next big consideration – perhaps the biggest one is choosing the right home in a community your family will enjoy living in. Investing in a growth area also means that reselling your property means high potential returns. Lendlease properties for sale near Adelaide CBD is a hot commodity right now and worth your consideration.
Blakes Crossing community therein, for instance, is positioned 31km north of Adelaide’s CBD and boasts an abundance of established amenity. 2017 winner UDIA best Masterplanned Development in Australia, the community offers everything needed for a busy family lifestyle.
There you have it! You can dive deeper into home financing topics by visiting home developer and real estate websites or finding a lender in your area to help you through the process. Best of luck!