It’s an exciting time. You’ve saved really hard and have a deposit ready to buy your first home. You’re ready to take the plunge. But buying a home isn’t a particularly smooth or easy experience for most people, and if it’s your first time, it can be even more complicated and overwhelming. Take a minute to remember that all homebuyers go through similar confusion and concerns; the only difference is that at least they’ve done it before.

So when you’re ready to jump into the property market, take a deep breath and spend some time doing research. The better prepared you are, the easier the whole process will become. It still might be a slightly bumpy journey, but at least it won’t be quite as bad. You’ll also reduce your risks of a total disaster.

Step 1 - Check Your Finances

I spoke to a realtor once, and he said that the number one mistake first home buyers make is that they don’t make sure their finances are in order before they start looking. In other words, they get too far ahead of themselves. They find the home of their dreams, only to discover that they can’t get a loan after all. So save yourself some heartache - make sure your deposit is sufficient, and that you DO qualify for roughly the loan you think you’re going to need. Some lenders will even pre-approve you for a loan, which simply means that they assess what size loan you can afford, and unless you’re hiding something or your financial situation changes drastically in the meantime, they will give you a loan.

Going through the process of applying for a loan will also bring to light any issues with your credit report. If you know about it now, you have time to clear up any mistakes or irregularities, long before you actually need the loan.

Once you have a budget - stick to it! Looking at houses you can’t afford will only lead to disappointment.

Step 2 - Research

Okay, research is a word, a bit like budget, that tends to send a lot of people to sleep. But it’s really important to know what you’re looking for before you start looking! There’s no point going to look at houses unless you know how many bedrooms you want, what kind of house you want, where you want to live, and so on. Sit down and brainstorm some questions you can ask, so you don’t waste time looking at a property that just isn’t going to suit you. Some questions to think about include:

How many bedrooms do we need - now and in the future?
Are there schools close by?
Will it be convenient for work, or will I need to spend too much time commuting?
Is it a safe neighbourhood?
Does the house need extensive repairs or renovations?
Is their public transportation close by?
Is it in an area where it will hold its value, or even be worth more if I sell it in a few years time?

Step 3 - The Real Estate Agent

Once you know the area you want to buy in, take some time to research the local real estate agents. A good real estate agent will be very familiar with the housing market in that area, and should be patient enough to answer any questions you have about the process of buying a house. The stronger the relationship you have with your agent, the better the experience is likely to be for you. An agent who likes you and is keen to help you find the perfect home is worth his weight in gold.

Step 4 - Making An Offer

Now you’ve found the perfect home, it’s time to take the big step and make an offer. This can be a frightening and difficult step, so take your time. It can also be stressful, because as a buyer you have a budget you want to stick to, but the seller wants to get the best possible price for the house. So often there’s a bit of negotiating to get through before your offer is accepted. Take your time, keep cool, and in the end if the seller’s price is out of your reach, be prepared to walk away. The buyers who pay too much are always the ones who fall in love with a house and get themselves into financial trouble because they let their emotions lead them into a commitment they can’t afford.

It’s also important to read through any contract before you sign it. Make sure it includes what things will or won’t be included in the purchase, such as appliances. If you want to get any inspections or reports done, make sure you give yourself the option to cancel the contract if those reports detect major issues. NEVER accept the agent’s word that something is covered or included - it MUST be in writing.

Step 5 - Home Inspection

Buying a home is a huge financial commitment, and the last thing you need is to have huge repair bills the day after you move in. So make sure you get a home inspection. Sometimes you can arrange to get this done before finalising the contract, other times it occurs after it’s finalised. Personally, I always sign contracts subject to an inspection. Check with your legal adviser if you’re not sure, but it’s worth have a clause prepared which gives you the right to cancel the contract without penalty if a major problem is found in a home inspection within 14 days. If major issues are discovered, you then have the choice of cancelling the contract or perhaps negotiating a better price.

Step 6 - Closing the Deal

The most exciting moment of all - the ownership of the property is transferred to you, the buyer. Closing the deal, or settlement, can also be a time when all of a sudden the size of the commitment you’ve just made can hit you in a big way, and lead to buyer’s remorse, or doubts about your decision. Did I pay too much? What happens if I lose my job? Maybe I should have waited a bit longer to see if something better came along… There’s hardly a homebuyer alive who hasn’t thought most of those things, and plenty more, at some time between signing the contract and moving into the house.

Just remind yourself why you chose the house, and trust that you made the right decision.

For tips about choosing the right home loan, check out Home Loan Zone Central

Tags: first home buyer, fixed mortgage loan, home loan, home mortgage, Mortgage, owning homefirst home buyer, fixed mortgage loan, home loan, home mortgage, Mortgage, owning home

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There have been many recent worries about fears in a crash in house prices in Australia’s currently buoyant property market - but it has bucked those trends and continues to be resilient.

Figures released in September 2005 by the Australian Bureau of Statistics for the June qtr showed that established house prices across the 8 capital cities fell by a very modest 1 per cent over the quarter to be 0.1 per cent lower than 12 months earlier.

For new homes (minus land), prices edged up 1.1 per cent over the quarter to be 5.7 per cent higher than a year earlier, showing the increasing pressure that on the supply of building trades.

First Home Buyers are making up a large contingent of this strong market trend with increased prices not dissuading them from purchasing. The first home buyers grant (fhog) continues to be a strong motivator to get people buying their first home.

When comparing cities, over the three months, established prices fell in Sydney by 3.1 per cent. Rises were recorded over the quarter in Perth, up 3.8 per cent, Adelaide, up 1.5 per cent, Darwin, up 1.4 per cent, Melbourne, up 1.3 per cent, Brisbane, up 0.8 per cent, Canberra, up 0.3 per cent and Hobart, up 0.2 per cent.

For brand new homes (excluding the land cost) prices rose over the quarter in all cities except Melbourne. The biggest increase was recorded in Perth, up 3.6 per cent followed by Darwin, up 2.8 per cent, Canberra, up 1.1 per cent, Hobart, up 1.0 per cent, Sydney, up 0.9 per cent, Brisbane, up 0.5 per cent, and, Adelaide, up 0.3 per cent. Prices fell in Melbourne by 0.1 per cent.

Sheldon Fassom - Finance Manager - First West Home Loans - http://www.firstwesthomeloans.com.au

Tags: fhog, First Home, first home buyer, First Home Buyers Grant, home loanfhog, First Home, first home buyer, First Home Buyers Grant, home loan

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When you first get your home loan documents, they look pretty scary. Long, generally full of legal gibberish that can send you to sleep in five minutes flat - the last thing you probably want to do is sit and read them!

But understanding your mortgage documents is crucial if you don’t want to get yourself into trouble down the track. If you can’t understand them by yourself, get a legal professional, knowledgeable friend or your mortgage broker to help you. Ask lots of questions!

Some of the main clauses you need to look for are outlined below. The annoying part is that almost every loan document uses different names for the same thing, but if you understand roughly what you’re looking for, hopefully you can find if any of these are included in your mortgage. Then you can make sure you understand the consequences of those clauses.

Balloon payment - this is one you definitely need to check for in your fine print. A balloon payment happens when you either make interest only payments on your loan, or perhaps reduced payments, then at the end of the loan term you pay off a final lump sum. While lower payments may sound great, the reality is that you’re paying a lot less off the principal of your loan. So at the end of the loan term you may still have a substantial loan balance, and you will have to run around and get another mortgage to pay it out. If your circumstances have changed, and you have trouble getting a loan, you may end up losing your home.

Note - it’s amazing how many tricky things get hidden in the fine print under “note”. Notes usually contain clarification or extra terms. For example, if you haven’t paid your repayment within a certain number of days of the due date, the lender may have the right to sell your home. It may also give the bank the right to take any of your assets if you do not make your payment. Make sure you’re very clear about ALL of the rights the lender has if you miss a payment.

Notice - this section is also very important if you miss a payment or are running late. Some lenders will give you notice that you’ve missed a payment and outline the steps they will take if the payment isn’t made within a certain time period. Others, however, will not give you any notice, and the last thing you want is to get a letter in the mail telling you they’re selling your home. Always be sure to have payments ready to be paid while you’re on holiday, or make arrangements if you’re ill or incapacitated. Send it early if you can, so you don’t have to worry about missing the payment. Check to make sure the lender will give you time to make up the missed payment, or whether it will commence foreclosure proceedings immediately.

Acceleration - this clause exists in most loans in some form, and mostly it’s never used. But you need to know if it’s there, and what it means. Basically, this clause gives the lender the right to bring forward the time when your loan is due, and allows them to ask straight away for the full amount remaining of your loan, if you miss a payment. This may mean you suddenly find yourself having to find another home loan, quite often at the worst possible time. After all, if you’re missing loan payments, chances are you’re missing other payments as well. Make sure you understand how much notice the lender has to give you in this situation, if any.

Extra fees - I sometimes think lenders have a whole department devoted to coming up with new and ingenious fees to charge borrowers. I’ve copped a few of these in my time, because I didn’t read the fine print thoroughly enough. It still bugs me that I pay $250 a year as a “package review fee” on one loan - and I don’t think the lender has ever reviewed my loan once.

This one may seem a bit obvious - but confirm that what you’re signing is what you agreed upon. Check the various fees, interest rates, loan term etc. I’ve had loan documents turn up where the interest rate was a standard rate, and yet I’d negotiated a much better rate because I’d taken out 3 loans at the same time. So mistakes happen - and if you don’t fix them at the document stage, it will be a lot harder to change them later.

In the end, reading mortgage documents is probably nobody’s idea of a fun time. However you should never sign any document you don’t understand. Take as long as you need to make sure the documents make sense, and that you understand what happens if you mess up on your payments. Always ask questions - the only silly questions are the ones you don’t ask. And never be afraid to ask for help from a professional. Spending a few hundred dollars getting your legal professional to review the documents and explain them clearly to you may be the best money you spend when buying your home. In the excitement of buying your dream home the fine print in your home loan documents can seem unimportant, but in the long run it may just be the most important part of the process.

To find out more about choosing the right home loan, check out Home Loan Zone Central

Tags: first home buyer, home loan, home mortgage, Mortgage, mortgage documents, owning homefirst home buyer, home loan, home mortgage, Mortgage, mortgage documents, owning home

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