If you are getting ready to look for your first home, you are probably feeling incredibly excited. This is an exciting time in anyone’s life. However, it is also probably the biggest investment you have made so far, and maybe the biggest you will ever make. For this reason, it is important to approach the property buying process with care. There are a lot of myths and misconceptions regarding buying a house, and so in this post, we will separate the truth from the lies. Read on to discover some of the most common home buying myths that you need to stop believing.
You only need to think about the monthly mortgage payment – There is only one place to begin, and this is with the financial side of things. After all, this is where a lot of people go wrong when buying their first property. When buying a house or flat, you are going to need to save up more than the deposit, and you will also need to budget for more than the monthly mortgage payments. First you need to understand how much your mortgage repayments are going to be, it is helpful to use a mortgage calculator to see how much this is likely to be. Of course, you are going to have bills to pay too. Moreover, you are now responsible for anything that goes wrong with the house. Therefore, if the boiler breaks, you are going to need to buy a new one, and this is going to set you back a fair amount, which is why it is advisable to save up an emergency fund for situations like this. If you don’t, you could find yourself in a nightmare situation if you have an expensive repair bill and you don’t have any extra money available.
Assuming you don’t need to get a home inspection survey – If you have found a house that you like, it is imperative to get a professional survey conducted before you sign on the dotted line. You can either opt for a general inspection or a specialist one, such as the type of service that is offered by the cladding taskforce. Yes, this is going to cost money, but it could save you hundreds if not thousands in the long run. A lot of people assume that any issues will be obvious when they view the property, but this is not the case. The person selling the property may have made an effort to cover up the issue. Most problems can only be picked up by those with an expert eye. This will ensure that you do not end up spending money on a property that requires extensive repairs once you move in. Or, if you do decide to proceed with the property, you now have an excellent bargaining tool that should be able to get you a decent percentage off the original asking price.
You will need to put down a deposit of 20% – A lot of people looking to buy properties today assume they are going to need to put down a deposit of 20 per cent. This is why a lot of people simply assume that they are never going to be able to afford to buy their own house. However, it is certainly worth shopping around and seeing what offers are available to you. As a first-time buyer, it is likely that you are going to be eligible to a number of help-to-buy schemes. You may be able to, for example, secure a property with only a five per cent deposit. Nevertheless, if you are able to put together a bigger deposit, you will be able to benefit from better mortgage deals.
You need a perfect credit score in order to secure a mortgage – If you have a bad credit rating, you will certainly need to work on this before applying for a mortgage. However, you do not need to wait until you have a perfect score. If you have a ‘good’ or ‘excellent’ score, this should be enough to secure you a mortgage. Moreover, it is important to recognise that there are a number of factors that are taken into account when determining whether you will be accepted for a mortgage. This includes your employment history, as well as your assets, debts, and income. Needless to say, it is recommended to pay off your debts before you apply for a mortgage.
The asking price is set in stone – You will find that a lot of sellers set their price a bit higher because they are expecting buyers to try and bargain with them. There is always room for negotiation. Plus, if sellers definitely do not want to budge, they will make this clear from the beginning. You will find that the adverts for houses like this will state offers over ‘x’ amount only, so you know that they are not willing to negotiate. However, if the advert does not specify these terms, then it is highly likely that they are going to be willing to accept a lower price. Not only this, but if the seller is not willing to negotiate on price, they may be willing to offer something else to sweeten the deal. For example, they may be willing to cover some of your fees, or they may leave some of the furniture in the house. This is definitely an avenue that is worth considering if you cannot get the asking price down.
The only up-front cost is the down payment – Back to those finances again! Another myth that a lot of home buyers believe is that the only cost they are going to face during the property buying process is the down payment. This could not be further from the truth. In fact, a lot of experts recommended that you save an extra 10 per cent of the asking price for all of the extras. After all, you are going to have closing costs to cover, which can be anywhere from three to six per cent of the purchase price. You then have insurance, credit reports, inspections, taxes, and other legal fees to contend with. It quickly mounts up, which highlights the importance of putting together a budget so you know exactly what you are going to need.
A 30-year mortgage is the best option – Last but not least, do not assume that the longer you decide to invest in your property, the cheaper the payments on your mortgage are going to be. If you opt for a 3-year long mortgage, you are going to be paying interest for twice as long than if you were to choose a 15-year mortgage. Because of this, a 30-year mortgage can end up costing you a lot more money. Of course, if you cannot manage the 15-year payments because they amount to too much in terms of monthly payment amount, you may have no option but to go for a 30-year mortgage. Nevertheless, you should never simply assume that this is the best option. If you can afford the monthly repayments of a shorter term mortgage, you will probably find that this works out better overall.
Hopefully, you now feel more prepared for approach the property buying process. While this can be a bit overwhelming and daunting, you now know the fiction from the facts, and this will arm you well when looking for the right home for you. Good luck!
*This is a collaborative post*