Steps to Buying Your First Home

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A home is not only one of the biggest purchase you will ever make but one of the most overwhelming purchase especially to young adults buying their first home. Rushing through this multi-step process; deciding how much you can afford, fixing errors on your credit and saving the down payment can be quite costly and daunting.

However, with some planning years before you even think of hiring a real estate agent can get you on the road to home ownership. The following steps to buying your first home will help you prepare financially for this important purchase.

  • Determine how much home you can afford.

The initial step towards home ownership is introspection. You should take a hard and long look at your finances and determine your plans in the next years and how much you can comfortably afford to repay.

Begin with your monthly after tax income including that of your spouse if applicable, add any regular income from assets and any other income you may have. All this adds up to your total monthly income. The next step is to determine your monthly expenditure excluding your rent since you will not incur it once you purchase your own house. Subtract all other expenses and the number you get is what you can afford to repay every month on mortgage loan.

You should also consider your career, whether your salary is likely to increase among other family considerations like if your spouse may need time off in order to take care of the kids which can significantly reduce the total income.

  • Boost your credit.

Your credit score plays an important role when applying for a mortgage loan. A high score, one that is above 740 will help you secure better interest rates while a low credit score attracts higher interest rates.

More often than not, your credit report may have blemishes due to the missed credit card or student loan payment hence the need to check it early in order to have enough time to correct any issues and avoid having to handle a bunch of mistakes on the credit report when trying to get approved for a mortgage loan.

If you notice any problem, you should contact the credit bureau directly to have it fixed.

  • Consider where you want to live.

Buying a home where you live now is not a good idea since it will limit your freedom and you are still exploring your career path. You should buy a home in an area where you will not mind sticking around for a while According to expert advice, you plan to stay in your new home for at least seven years from the day of purchase as you will spend lots of money moving into the home and to get out is equally expensive.

How to decide the best area to settle down in

Consider the job market in the area as well as the cost of living. Other factors that will affect your quality of life include the city demographics, accessibility of the public transportation as well as the social scene.

In case the homes in your preferred neighborhood is beyond your price range, you can take some more time to save up or you can reduce the type of home you are looking for or even consider searching in a more affordable neighborhood.

  • Start saving for the down payment

Besides boosting your credit score, you should also begin to save for the down payment which should be at least 20 per cent of the home price meaning when buying a house worth £220,000, you will need to save at least £44,000. The more you put as down payment, the better the mortgage you will be offered.

A down payment that is more than 20 per cent of the home price also saves you from paying PMI (Private mortgage insurance) which protects the lender in case you fail to pay the loan. It also protects the lender from losing money when you end up in foreclosure.

  • Shop for a home loan

Educate yourself on the different home loans available in the market before taking the plunge. The interest rates charged on the loan determines its total cost as well as the size of the monthly payment. Therefore, it makes sense to shop around for a loan with the lowest interest rates that you qualify.

Before you shop, determine the type of mortgage loan that suits you best as well as the term you need so that you can compare the lenders fairly. The types of mortgage loans include:

1. Fixed rate mortgage loan

This is a conventional loan with fixed interest rates for the entire term. It allows you to spread the cost over time while making fixed payments every month. This type of loan is ideal for buyers with predictable income and who intend to stay in the home for a long period.

2. Adjustable-rate mortgage

The interests of an adjustable rate mortgage loan changes periodically usually depending on the index. This type of loan is recommended for buyers who anticipate an incline in interest rates.

3. FHA (Federal Housing Administration)

Most first time home buyers qualify for FHA loans. These loans have more flexible borrowing requirements and low down payments, more flexible income requirements and reasonable credit expectations.

However, a home purchased with FHA loans should be the primary home of the borrower and should not be a rental or investment property.

  • Home inspection

Before making an offer to a home, you should have it inspected for any faults to ensure that it is in perfect condition.

Depending on the type of property, there are different inspections that should be made including:

· Pest inspection

· Building inspection

· Strata inspection

· Electrical inspection

· Property or land survey

It is important that you find out any problems like shifting foundation, dampness, faulty wiring or plumbing issues before paying for the home.

At A B Property’s Auckland property inspector, we have many years of experience in home inspection where we conduct pre purchase house inspection and report in 24 hours to allow you make an offer in confidence.

We offer:

· A thorough and detailed inspection reports

· Leaky home inspections North Shore

· Moisture testing

· An estimated cost to repair the identified problems

· Meth testing by an external company if necessary

To book a pre-purchase house inspection in Auckland including West Shore and the North, contact us now before making an offer on your preferred home.

  • Making the offer

After the home inspection, if you are satisfied with the report, you can now make the offer. However, remain leery when approaching the price negotiations and do not be inflexible after all, you want to purchase the property and would not want someone to beat you in the bid.

After agreeing on the price, sign the contract after reading it carefully to avoid any legal surprises after making the purchase. You can get a lawyer to explain to you any terms that you do not understand or make any changes that you may need.

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Renovations to be Aware of If You are Buying an Older Home

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Did you just fall in love with a legendary villa in North shore or anywhere in Auckland? Before jumping in and spending a fortune on it, it is better that you find an expert who does house inspections in North Shore. We recommend AB Property Inspections which is a highly trusted property inspector in Auckland. Here are certain factors which no one except a professional inspector would tell you:

The top two must-do renovations

When you buy a new home for yourself, always add the cost that will require re-roofing and windowpane replacement. Any roof that is more than ten years old is a hazard. Sooner or later, they will begin to crumble and leak.

If left unattended, it could lead to more costly repairs. Understand that old windows, as majestic they look, are also very poor insulators. They simply don’t function well during cold winters and hot summers. If you find a home where the owner just replaced the windows and roofing, you just hit the jackpot!

Old house equals prehistoric technology

In terms of technology, one year is equal to a century. So when you buy an old house, the technology that comes with it will be prehistoric. Basically such a house will have ancient systems of wiring, plumbing, windows and heating. So any time you want to make some repairs, the costs are going to be super high. Refitting costs are going to hit the roof. When buying an old home it is always better to hire professionals who can gauge the amount that will have to be spent to update the technology.

Remodeling costs

The sense of requirements today are a lot different from what it was a decade ago and not even comparable to what it was a century ago. Thus old houses with all their charm, might have utility issues because the generation who built such houses had other ideas in mind. For example, most old houses have very small bathrooms and closets.

These days, people are used to much bigger ones thanks to the tons of clothes and other accessories they pile up. The only way to solve such problems is by remodeling the internal structure. This is something which people over look when they buy an old house. They just fall in love at first sight and then end up facing a divorce situation.

Outdated doorways + Latest Television = Expensive Trouble

When older homes were built, a lot of modern appliances were not even invented. This is something you might realize only when the movers attempt to squeeze your washing machine through the front door. The doorways of most old homes are narrow compared to modern ones. They simply weren’t supposed to accommodate a 65 inch television set. Costs to rebuild such doorways should also be accounted for.

Renovation is a must when it comes to old house and these are just a few of the long list of issues that you might face while buying one. Always consult a professional building inspector as big money is involved. We found out that the best house inspections in Auckland is conducted by AB Property Inspections.

Renovations You Can Do to an Older Home

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Spending too much money on a renovation can be your biggest fear. Maybe you bought an older New Zealand home that needed some work or maybe you just love older homes. Either way it is likely it will need some repairs or renovation to update it and add value. You can do this slowly over time if the home is comfortable to live in. Should the home need extensive renovations consider living in a mobile home or caravan on site while the messy work is completed.

Weatherproofing the home before tackling the inside should be a priority. Broken windows, leaking roof, missing tiles or damaged guttering should all be looked at fixing first before winter and certainly prior to any internal renovations. If the exterior walls are wood they will need the paint stripping to check for rot, borer or any damage. Once fixed up they can be repainted with two coats of quality exterior paint to last another 10 years at least.

You may wish to keep the existing character windows if present. Carry out any repairs but consider replacing any that are beyond repair. Windows may be purchased second-hand from other renovations. New windows can look good in older homes and you will certainly see the cost benefits with reduced electricity bills due to improved insulation.

An older home will likely need a bathroom makeover. Appliances may be old and need replacing. It can be costly to extend the size of a kitchen so look instead at maximising space within cupboards and using the full height of the room with floor to ceiling storage options. If the house is really old look at having a plumbing survey done to highlight any damaged pipes or metal pipe work that would be safest upgraded to plastic.

Renovations, especially a full gut and start again are great opportunities to re-route any drainage and water supplies for relocating bathrooms or adding in an en-suite for example. Again look at the wiring and for fire safety reasons and consider doing a full re-wire if outdated. You may get lucky and pull up some old carpet to discover the original floorboards just need a sand and stain to return them to their original splendour.

Kitchens and bathrooms are the two most important rooms when renovating as these are the ones new buyers will pay close attention too. Replace old baths, showers, sinks and toilet units especially if not white or age stained. Clean and fresh will go a long way to improving the overall look of your renovation. Personalise with flooring choice and colourful accessories.

Before you buy a house that needs renovating get a property inspection carried out by a qualified and experienced inspector and/or builder to highlight any possible issues and give you an idea of the likely costs of any work that needs doing.

To get an idea of the work that may need doing to an older home you plan to buy contact AB Property Inspections via their website www.property-inspections.co.nz AB Property Inspections are experienced in house inspections in North Shore.

Peter Seton has over 30 years of experience as an Auckland property inspector and conducting pre-purchase house inspection in Auckland. Lighting will be likely outdated and certainly not energy efficient. Use a renovation period to install directional spot lights for maximum work lighting and maybe even add in new power points especially if you are fixing up the walls.