Financing a home may seem like a daunting prospect when we think about all the paperwork that is sure to be involved. The truth is that while the process is undoubtedly thorough, it need not be intimidating at all. Preparation and readiness can help remove most anxiety about home financing.
Here are three things you should know before you finance a new home
1. Personal finance homework saves time and money
Gather your credit information. All lenders will look at your various documents – savings, taxation, outstanding loans – and decide if you are creditworthy. Make sure all your documents are to hand. Also, ensure that you are up-to-date on payments with any loans you may have including credit card bills.
Next, work out the cost of the home purchase process. The purchase price is one thing but work out all the other expenses as well. Interior work, taxes, stamp duty, repairs, additions, remodeling, furnishing, moving charges, and exterior work, all need to factor into your total cost of home ownership. Once you know this, you have the right ballpark for how much home finance is required.
After that, see how much you have in savings for the deposit. Is it enough to get you financing? How much more do you need? How much time will that take?
One outcome of this is that you might reevaluate the type of home and the location of the house that you wish to buy. This is not a bad thing. Buying a home is not something you have to do today. If you are not prepared, it is better to wait before entering into such a significant financial commitment.
2. Evaluate various home finance options
Work out which home buyer financial aid program that suits you best. In the UK, for example, you can get home buying assistance from the Help to Buy plan wherein the government loans up to 40% (in London) of the property price at a low-interest rate. If you have saved for the 5% deposit, you need home finance for the remainder only. You can even choose the Starter Homes scheme and get a 20% discount on the property price after paying the deposit.
When approaching banks/lenders for a housing mortgage, make time to understand what they are offering entirely. Loans have to be repaid over several years. It is a commitment you cannot back out of without losing your home. Get professional help, if need be, to understand which loan scheme is most manageable for your financial status as on date and the change you expect in it in future.
3. Professional help from a trusted real estate agent can save you from heartache
Buying a new house is not just a matter of saving for the deposit, taking a loan and making the purchase. Buying a house involves contracts, negotiations, evaluations, inspections, appraisals, preparation of documents, dealing with local government authorities, ensuring that sellers give the home in the promised condition.
A real estate agent can help you navigate all stages from viewing the house to evaluating finances to getting government aid to getting loans to dealing with contractors. Remember, a seller’s representative does not have to protect your interests since you are the buyer. Buyers are best served when they employ their estate agents. To find a real estate agent that you can trust, a search on the internet will give you a list of real estate agencies.
Find out what you can about the performance of the agencies and their estate agents. You can even give each a call or meet with representatives and choose one with whom you feel comfortable. Remember that it will be a long-term association. Find a real estate agent whom you like and whom you find competent and professional.
A professional real estate agent will keep open lines of communication and will get back to you as quickly as possible about all queries. They will also not dismiss any question as trivial.
A real estate agent is invaluable even before you decide on a house. Take the help of your real estate agent to work out your finances, to understand what is the best home for you and how to get a house that is suitable not just for your life today but the house for your future life.
An estate agent will also help you understand in detail about the available financing options. Financing a home is a multi-year commitment; make a decision using professional help to protect your financial interests.
Financing a new home can seem like a paperwork-filled process. A few simple preliminary steps like understanding your personal finance and evaluating various home finance options can ease the burden by quite a bit. Asking for professional help from real estate agents makes the process even more comfortable.