Are You an Aspiring Homeowner? Start Doing These New Year’s ResolutionsJanuary 12, 2022
Being a homeowner is a dream for many, if not everyone. After all, owning a home is a huge achievement and provides some level of stability and security. However, owning a home is not a glamorous process. It takes years of preparation – from saving up to finding the right home for you. This is why, as much as possible, you have to take the first steps as early as you can.
And speaking of taking the first step, what’s a better time to reset and move than the New Year’s, right? To help you out, we’ve listed some recommended New Year’s resolutions for aspiring homeowners.
1. Save up for your dream home now
These days, saving for a home is difficult, so it’s best to get started as soon as possible. If you can’t save up for the total price of your dream home, try at the very least to save for a down payment of 10–20 percent or more. A 20% down payment eliminates the need for private mortgage insurance (PMI), which protects the lender in the event you default on your payments and wind up in foreclosure. The said insurance typically costs 1% of the overall loan amount, and it can significantly increase your mortgage payment as you’ll be charged that 1% annually.
In addition to your downpayment, you also have to pay for closing expenses which are usually 3-4% of the property’s purchase price. Your lender will provide you with a particular figure so you know exactly what to bring on closing day. These charges cover crucial aspects of the home-buying process, such as appraisal, house inspection, credit report, legal or attorney fees, and homeowners insurance.
The bottomline is: owning a home is expensive. You are liable for everything when you own a home. This includes maintenance and other surprise expenses. Of course, the element of surprise is the most difficult. As strange as it may seem, all homeowners must prepare for the unexpected. Or, better yet, look for potential issues ahead of time so they don’t become surprises.
So as you start this year, be extra intentional in saving up for your dream home. Cut down unnecessary expenses, make sure you’re debt-free and prepare for all the expenses that go with home buying.
2. Improve your credit score
Lenders use your credit score (or credit rating) to determine whether or not to make a loan to you. A credit score can help you get better offers or figure out why a lender turned you down. You got it – your credit score is extremely important in the home-buying process, so if it isn’t where it should be, make a resolution to improve it.
Pull your credit score to see where it stands is a good place to start. There are websites in Australia that can help you obtain your credit report for free. Once you know your current credit score, set a strategy for improving it. Do you have a few additional payments to make? You will feel more at ease entering into the house purchasing process if you have a good credit rating.
3. Determine how much you can afford for a home
Check your monthly budget to see how much you can afford for a home before you become emotionally connected to a dream home you find online. As a general rule, make sure that your monthly housing costs including association fees, taxes, and insurance do not exceed 25% of your monthly take-home earnings. For example, if you earn $10,000 a month, your monthly housing payment should not exceed $2500. Also, don’t forget that your monthly payment includes property taxes and homeowners insurance.
The start of the year is the perfect time to reorganise your finances, so along with saving, we suggest that you do this resolution. It will also help guide your future financial decisions (e.g. whether you need another income source to afford a home).
4. Get preapproved for a loan
If you’re the type of aspiring homeowner who has saved enough cash for downpayment and closing costs, then this year is the perfect time to take a step forward! Begin by researching for a reliable mortgage lender or broker and talk to them about getting a home loan. And as much as possible, do this resolution first before looking for a home. It is best to get preapproved early on as it lets sellers know that you’re serious about buying a house, which is a terrific method for first-time buyers to have a leg up in a competitive market.
To get preapproved, your lender will need to check your financial details including your proof of income, taxes, and more. Then they will submit your loan for preliminary underwriting.
5. Conduct a research on your preferred neighbourhood
Don’t buy a house just for its look and price. Make sure that you choose one that you and your family will feel good about by considering the location and neighbourhood quality of your prospective home.
Talk to your project manager or agent about crime rates and the quality of schools in the areas you’re considering. Make a rough estimate of your new commute times to evaluate if they’re feasible. Read reviews online. If you’re from New South Wales, you may want to choose premier properties in the fastest growing suburbs in Sydney, Australia.
Once you have decided on a location, you can now go on the fun part which is selecting a home and land package that suits your budget.
6. Enjoy the process
The homebuying process can be a stressful time for many. But as much as possible, remember to relax as buying a property is an equally exciting experience that you’ll want to remember fondly. Take virtual tours and engage your family. Use it as a bonding time to get to know what your family members like in a home. As restrictions permit, take trips to neighbourhoods you’re interested in, and wander around, eat something, and experience what it’s like there throughout the day.
Let’s make building and buying a home easy for you
Whether you want to buy a new home or build one, you can come to us at BuildQ Group to help you find your dream home. We are BuildQ Group, and we’re trusted builders of functional, safe and luxurious houses that last. We also have contemporary home and land in Sydney, Australia including Marsden Park, The Ponds, and more.
BuildQ Group has successfully completed more than 550 projects, and we have built strong relationships with our clients. We are the BuildQ Group – builders you can TRUST.
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