Buying a house may not be the most important decision you ever make in life, but it is probably the most important FINANCIAL decision you will ever make. Between saving for a down payment, incurring loan interest and closing fees, to all the maintenance and upkeep needed over the years, there is no other purchase you’ll make in your lifetime that will compare to the discipline needed to buy and own a home. Because of the complexity of the home buying process, especially for first time buyers, there are a few simple rules you need to follow.
Saving for a down payment is first and foremost. The more money you have saved the more willing a bank will be to lend you the rest of the money needed. My recommendation is that you have at least 20% saved as a down payment, and this is above and beyond any appraisal, inspection, and closing cost fees you will incur.
Once you have the down payment funds you will need to find affordable financing with a reputable lender. Finding an appropriate home loan, like the Homestart low deposit home loan, will put you on the right path. You will want compare term and interest rates, as well any other contingencies or clauses that come with the home loan.
Once the home loan is in place you just need to make sure the home is functional and relatively maintenance free. Make sure you have a thorough inspection done on the property. Often times a buyer is reluctant to spend the extra money on a home inspection, only to sign on the dotted line and have expensive problems arise after the fact. Spending a little extra now will give you peace of mind, as well as save you more money further down the road.
The down payment and closing costs aren’t the only expenses you need to consider. Make sure you save enough money to furnish the house, and for any extras like real estate taxes and maintenance issues that will inevitably come up. When I bought my first home I had an issue with the furnace, and that cost me a few thousand dollars to replace my first year living there. Because of this unexpected maintenance cost I was unable to fully furnish my home for several years. I had to save up to buy a dining room table two years after I moved in!