For most people, buying a house is one of the key steps on their journey to financially secure adulthood. But it can also be a complex task for the first-time buyer. Before embarking on the journey, educating yourself on the fundamentals of house buying is key. Knowledge is power in this sense, and it’s important to arm yourself with the knowledge to buy when the time is right.
It’s likely that – if you’re considering buying a home – that you’ll ask yourself ‘how much can I borrow?’ very early on. To answer that question, you need to consider a number of different factors.
Your debt-to-income ratio
Effectively, you will need to calculate this yourself to discover the genuine cost of purchasing a property. When calculating your debt-to-income ratio (which essentially determines whether or not you can afford a property) you should consider factors beyond the price of the property, such as the local market, your lifestyle needs now, and future plans. There are debt-to-income calculators online that can help you.
Navigating mortgage rates can be complex and variable. Rates can be based on a variety of factors, and as such, calling in the professionals to help you can be incredibly valuable. Essentially, as there are different types of loans, there are different types of mortgages. Mortgage rates will differ depending on the area, and they can also vary depending on your details, such as your employment, the type of mortgage you get, or your credit history.
Before beginning your search, assessing your financial health and calculating how much a lender will give you can help with your search. Notably: if you’re placing an offer on a home, a pre-approved loan is important.
Real estate agent
To help you navigate the journey of house-buying, an estate agent is invaluable. They will help you find homes that match your requirements and price bracket. They will show you around properties and help you to decide which property is right for you. Once you have found a home and placed an offer, they can help you in the negotiation of the price and help to get you the best offer possible. Of course, it’s possible to do this yourself, but a good real estate agent can make a world of difference.
When budgeting for your house search, it’s important to also consider the hidden costs of house-buying. These can vary from region to region, but traditionally these consist of legal fees associated with house purchasing, property surveys to ensure there are no hidden problems with the property, and the cost if anything falls through. It’s a risky game, and if someone pulls out of the process, many things you may have already paid for are non-refundable.
Some people are lucky enough to find their dream property in weeks – for many, the process is much longer. When determining your timeframe, factor in that it could take anywhere from 6 weeks to over a year for a committed person to purchase their home.