Buying a home is a complex, multi-step process. Especially, if you are buying a home for the first time, becoming a first time homeowner is not as easy as it seems on board games like Monopoly. Be it the Bay Area real estate market or anywhere else, buying a modern home, with smart and sustainable amenities, requires careful planning, and for most young professionals, some serious budgeting!
Consider these 5 things when thinking about buying your first home.
1. Save for your deposit amount:
Most lenders ask for a deposit of at least 20% of the amount you are planning to borrow. So, if you’re buying a house worth $300,000, your savings for the deposit should be at least $60,000. There may be some exceptions regarding the deposit amount, which can be as low as 10%. But, saving more for deposit wouldn’t hurt. Remember, the bigger your deposit, the less you’ll pay in interest over the long term.
2. Choosing the property and location:
Smart homes are trending in the Bay Area real estate market. While you might not think your first home will be your dream home, opting for an affordable home with sustainable characteristics is definitely possible. For the location, consider things like available public transport routes, proximity of shops and schools within walking distance, as well as energy efficient features.
3. Getting pre-approved for a mortgage:
There are many types of mortgages offered by real estate services. Each of these mortgages comes with its own fees, degree of flexibility and interest rate. All these factors affect how much the loan will cost you and when you’ll have to pay it off. Rather than requesting a financing contingency in the purchase and sale agreement, get pre-approved for a mortgage prior by connecting with a loan officer as this will make your offer that much stronger.
4. Becoming familiar with the closing process:
It’s important to understand the steps involved in closing the purchase of a property. Finding a good realtor that is knowledgeable about this process can be a very valuable asset. It may however be more beneficial to do some of your own due diligence by contacting local title or escrow companies that may be of assistance. The closing process will be different in every location so be sure to have your realtor and/or closing officer educate you on the steps prior to getting underway.
5. Moving in and covering on-going costs:
- After you purchase your home, you still need to attend to some basic costs, such as –
- Moving services
- Connection fees for power, phone and internet
- Any renovations if required
- Legal expenses
- Mortgage repayments
- House and mortgage insurance
- Rates and maintenance costs
So, be a smart buyer and consider all these expenses before making your decision!