Tips to Buying Your Home
Buying Your Home From Inspection to Settlement
Most people are under the impression that we 'sell' real estate. Although this may be true, our role is not to push you into buying a home, but to show you the home that you may fall in love with! We go buy the idea that a home is bought by the "right person looking at the right time". Generally, nothing we say or do will change your idea of what you think of a home, so being "pushed" into buying a home is a thing of the past here at Griffith Real Estate.
Location
Every buyer is influenced by money, access to amenities such as schools and shops etc. and where their family and friends live or even where they grew up. A location that is perfect for one person may not necessarily be perfect for another, based on the controlling factors listed.
The two most important points in buying a house are:
- How much you can spend?
- Suburb or Location
Firstly, phone a few lending instiutions and get an idea of how much you can borrow. Shopping around for the right loan can save you thousands of dollars over the life of the loan. We can help you with this if needed.
Don't forget there are other costs involved in purchasing a home, e.g. stamp duty, bank fees, solicitor fees etc. These must be taken into account by yourself and your lenders when considering purchasing a first home. If you are a first home owner, don't forget to ask your bank or solicitor about stamp duty exemptions or grants.
Secondly, go for a drive around the area that you may want to live in. Making a note of houses already on the market, schools, shops, transport and clubs. Weigh up the positives and negatives of living in that particular location before you decide on your purchase.
Once you have done your homework, call into our office, email or phone us and we can then assist you in the following ways:
- We can produce a list of. the properties in your price range, in the locations you are interested in.
- You can then go for a drive, highlight the ones you like and cross out the ones you don't.
- If you wish to look at any specific houses, call our office and arrange a time with one of our Sales Team to have an inspection. Keep an eye on social media for our Open House Inspection times.
Time to Inspect
You've come up with a shortened list of properties that you wish to look at. Phone GriffithRE to make your appointment. Remember a few things:
- All agents are paid by the vendor, so it is their job to obtain the best possible price for the person who is paying them.
- 'Market Value' is defined as 'a price that a willing buyer will pay and a willing vendor will accept'. In other words, a house is worth what a buying is willing to pay if the owner will accept the offer.
'Market Value' will vary from buyer to buyer as everyone is different and everyone has differing opinions of what they consider value for money. Be wary of what others may say abiut the values of houses. You are the one buying.
Buying a House is Not a Scientific Procedure
Generally, a buyer will walk into a house and their own 'gut feeling' will know if it's the right house for them. If it's not the 'right house' or there is something that is 'just not right', we will show you more houses but please do tell us what you didn't like about the house. This will help us get to know what your likes and dislikes are. Everyone says to look at plenty of houses to get a feel for the market, but keep an open mind, as the right house may be the first or second house you look through.
You've Found It... What Happens Now?
Once your offer has been accepted to purchase the property, a deposit will be taken and sale letters are printed and sent to all parties involved in the transaction. The vendor's solicitor will prepare two contracts of sale, one of which will be forwarded to your solicitor, the other to be signed by the vendor. Your solicitor will read through the contract and discuss it with you.
Your solicitor may also read through the pest and building reports with you and advise if further action should take place. While these reports are not compulsory, they will give you 'peace of mind' about your future home. Your solicitor will also liase with with bank and follow up finance approval.
Once both parties have signed contracts the solicitors will exchange contracts. This is when the sale is legally binding and the deposit of 10% of the purchse price is paid (unless a different amount has been arranged by both parties). Settlement day is the amount of days stated on the contract of sale from the date of exchange.
Finance Approval: 8 Ways to Improve Your Chances
- Make sure you can show the ability to repay. Being able to show that you can repay a home loan is one of the key requirements for lenders. Although an institution won't want to see a written budget as such, they will want to explore your current living expenses and financial commitments. If yor overall repayments are going to increase, the lender will be interested to see where the money will come from. Rent you are paying currently may cease, you may also be putting money away in savings or paying extra on your personal loan debt to pay it down quickly. All of this can help make it evident that you will be able to meet the repayments on the loan.
- Cut down unnecessary financial commitments. Financial commitments and personal debt can impact your application in two ways. When you originally applied for the debt there would have been an enquiry on your credit report. Too many credit enquiries can be detrimental to your credit profile. The credit limits on all of your cards are included in your repayments as if they are fully drawn. Credit cards, store cards, interest-free facilities and other personal loans can mean that you have less surplus cash available to meet repayments on a new loan. Before applying for a home loan, review whether your interest-free card or store card is still being used and if not, cancel them. You can also look to reduce the limit on your credit cards to help increase your borrowing power.
- Check your credit rating. Borrowers should make an effort to regularly check their credit report. This will give you an idea of how many times your report has been accessed in the past few years and if you have any defaults or negative repayment history recorded. By checking your credit report earlier on, you will know what it contains before a lender accesses it. If there is anything on it that isn't correct, you have time to contact the company that recorded it to get it corrected.
- Show that you have a safety net in place. Having adequate personal insurance is good advice, but lenders don't generally enquire about it. Most people do it for their own peace of mind and when you take out a home loan it is a great opportunity to review your cover. A buffer of funds can help provide a safety net in case your income stops. Most people either continue to save after they have taken out a home loan or hold back some of their savings to provide a buffer.
- Have a savings history. Showing that you can manage your expenses and save money is a big tick for lenders. Savings serve two purposes when borrowing; Firstly, the amount of money you can put away can be used to meet your loan repayments. Secondly, your savings form part of your contribution to the purchase. The larger the contribution the less you need to borrow and the lower risk you are to the lender. If you're borrowing more than 80% of the purchase price, many lenders require evidence of savings. Your savings will need to add up to around 5% of the purchase price of the property to meet the genuine savings requirement of many banks. So on a $300,000 purchase, your savings will need to add up to $15,000. Saving a larger deposit may also help reduce or avoid fees like Lenders Mortgage Insurance, and potentially you could be offered a more competitive interest rate as well.
- Try to have stable employment. Employment stability is important, as this is generally the income used to meet repayments. If you've had the same job for several years, this is a big tick. Most lenders prefer borrowers to be with their current employer for at least six months, not counting probation. If you have changed jobs recently, then lenders will look carefully at what you did immediately prior. Being in a similar role in the same industry for the past two years can be used to satisfy the lender's employment requirements, so be prepared to provide more information to prove a stable employment history.
- Don't apply with too many lenders. Financial commitments and personal debt can impact your application in two ways. When you originally applied for the debt there would have been an enquiry on your credit report. Too many credit enquiries can be detrimental to your credit profile.
- Disclose all information. It is important to disclose all relevant information when you apply for a home loan. If during the process lenders uncover credit cards or other debts, the loan may be declined due to non-disclosure because there could be questions about whether there are even further debts that haven't been disclosed. Being upfront about any other issues can also help the application proceed more smoothly. It could help save time and effort up front, ensuring that you are applying for the right loan.
Hidden Costs When Buying
You’ve found your dream place, organised your finances, set the auction date in your calendar – but have you considered the hidden costs of buying a house? In all the excitement of buying what is likely to be one of the biggest purchases you’ll ever make, it’s easy to overlook all the extra expenses involved in buying a property. Finding and buying a home can involve extra costs equivalent to 5-7% of the purchase price.
Stamp Duty
Stamp duty is a State Government tax on the mortgage documents and on the property price. Stamp duty rates vary from state to state, but the average for a $150,000 loan is about $550. Then there's stamp duty on the purchase price of your property. This will probably represent the largest add-on expense of the transaction. In NSW, stamp duty on a property purchase of $250,000 will cost around $7,240. First-time buyers may be exempt from stamp duty or entitled to a rebate or concession. Rebates vary between the states and may depend on the property price and the buyer's income. As well as stamp duties, you are liable for state registration fees for your mortgage and for the transfer of the property ownership. Land transfer registration fees range between $60 and $1,300 depending on your state and the value of your loan.
Conveyancing
Conveyancing is the term describing the legal transfer of property title from one person to another. After stamp duty, conveyancing costs often represent the largest extra amount you will have to pay for your property purchase. Many people choose to engage a conveyancer, expert or a solicitor who will take over the process for a trouble-free exchange. You can save time and money by employing the services of a conveyancing specialist. While their fees may be up to $2,000, the price will often include survey, building and pest reports. By themselves, these reports cost between $200 and $600 each. Check with your specialist for exactly what's included in the total charge.Do-it-yourself (DIY) conveyancing kits are available from the Law Consumers Association in Sydney. In addition to conveyancing fees, you will have to pay for a title search to verify ownership and type of property. There is no way of avoiding this fee.
Building Insurance
The responsibiltiy for building insurance and risk of loss can vary from state to state, so it is wise to ask your legal representative what insurance cover you will need before you buy the property. You should have the building insured at the time of settlement; otherwise, some lenders will not advance the money. To avoid any ambiguity, it is wise to insure the property as soon as contracts are exchanged.
Lender's Mortgage Insurance
Homebuyers may have to pay for lender's mortgage insurance if they borrow more than 75-80% of the value of the property. The insurance covers the lender if you default and the property's sale price is insufficient to return the lender's money in full. It does not provide cover for you as a borrower should you be unable to make repayments through illness or redundancy. You will need income protection or trauma insurance to provide that cover. If you can pay a deposit of more than 20% of the purchase price, lender's mortgage insurance may not be required and you could save thousands of dollars.
Apartment / Unit Costs
When buying into a property that may have more than one owner, such as a strata title unit development, you need to make allowances for the additional costs of shared maintenance and insurance of the property. If you are looking at purchasing in a unit or apartment complex, be sure to ask your agent about strata fees.
Getting There & Furnishing Your Home
And don't forget about moving costs. Hiring professional removalists can cost anything from a few hundred to many thousands of dollars. Renting a trailer or van and doing it yourself might cost less, but it is hard work. Also keep in mind if you are a first home buyer moving out of home the cost of furnishing a property can often add up. Also consider if you're upgrading to a big home, you will require more furniture to fill the space or potential different sized appliances.
Taking the Emotion Out of Making an Offer
Purchasers often ask agents for advice about what sort of offer to make on a property they would like to buy. Sometimes they simply want to test the water but often it is because market knowledge acquired during conscientious weeks and months disappears in the face of a strong emotional attachment to what they already see as their new "home".
Purchasers have to work at being objective if they find their dream home after seeing property after property that didn't suit. Above all, they need to avoid letting their feelings show, as a conscientious agent (working on a vendor's behalf) we may advise the vendor to drive a harder bargain if a purchaser appears too keen. It is better for purchasers to look for and highlight a property's faults, both to help them keep perspective and to avoid wearing their heart on their sleeve.
The crucial factor purchasers should take into account before making an offer is the state of the market. In a buyers' market, buyers have the upper hand and can drive a harder bargain by highlighting faults and playing a waiting game, but in a sellers' market, using such tactics will cause buyers to lose out to someone who is more market aware.
While some purchasers make the mistake of letting emotion cloud their objectivity, others find that being too hard-headed in the search for a bargain rarely pays off - a ridiculous intitial offer on a competitively priced property seldom ends up in a sale let alone a bargain. Vendors who are offended by low offers often refuse to make a counter offer and opportunities are lost on both sides.