If only house hunting is as easy as buying something from the supermarket, you could have been the owner of that cosy little house on the other side of town by now.
But the reality is that home buying is challenging and, in some cases, stressful and time-consuming. House hunting doesn’t have to be difficult or headache-inducing. You can buy a home without the headache, if you have the right tools take a look at our tips below:
8 Things You Need When House Hunting
Whether it’s your first, second or third home, it is easier to shop for a property if you know what you want, or what you are looking for. This is why making a checklist is a must.
List down your budget, along with properties that are within your price range. This will help you stick to your budget, and to check out only those properties that you can afford.
Make a list of your must-haves, the things your next home should have or you would not buy a property at all. Turn it into a list of needs vs. wants to help you make the right choice.
- Good credit score
How low your monthly loan payments will be often depend on your credit score. That is, the higher your credit rating the lower your monthly payments are. So make sure to check your credit information before you go house hunting. Pull up credit reports to check if you’ve been unfairly penalised for old or settled debts.
If your report shows a not-so stellar rating, work to boost your score before you shop for a property. Be sure to check out the scores that lenders and banks currently consider as qualified for low interest rates, so you can boost your score accordingly.
Credit Scores can be obtained by http://www.experian.co.uk/
If your looking to improve your credit score the blog post “Raise Your Credit Score 100 Points” has got some great tip and tricks on helping you do this.
- Debt-to-income ratio
So you have a budget. But can you afford the monthly mortgage payments, given your existing income, financial obligations and debts? Experts suggest that you calculate the mortgage payment for the home you want within your budget, plus increased expenses, such as utilities, taxes and insurance, and see if the amount doesn’t exceed a safe percentage of debt-to-income ratio, which is at 28% of your gross monthly income.
A great tool to help you work this out is the “Debt to Income Calculator” at www.simplyfinance.co.uk
- Down payment
You must have cash up front to pay for down payment. So be ready with the funds even before you go house hunting.
Ideally, you should save for down payment, which is anywhere between 5% and 20% off the price of a property. But you might be better off financially if you bank your own money, and seek assistance for down payment. There are options on the market. A little research will go a long way.
- Other fees
Don’t forget to include in your cost calculation other fees you might incur when buying a home.
Major upfront costs
- Deposit/ down payment is the amount you put towards the property cost
- Stamp duty is a government tax paid on homes, which amount vary on whether it is a first or additional residential property
- Valuation fee is paid to the mortgage lender who will assess a property’s value
- Surveryor’s fee to have the house you’re interested in thoroughly checked before purchase.
- Estate agent’s fees for the services rendered, if you hire one
- Electronic transfer fee for transferring the mortgage money from the lender to the solicitor
- Removal cost if you hire movers to relocate
- Closing cost is paid at the closing of a real estate transaction.
- Savings account
Having money saved up in the bank, which is over and above the down payment and closing costs, will make you a better loan candidate. This is especially true if your savings are worth three to five months’ your mortgage payments. Lenders prefer a borrower who is not living pay check to pay check. Extra savings will also qualify you for more latitude on other factors, such as loan terms, interest rates and other arrangements.
Whatever savings you have can also be used to cover maintenance and repair issues should they come up.
If your looking to put together a good savings plan and open a savings account, the one and only www.moneysavingexpert.com is a host of so much information on this topic you’re sure to find something to suit your needs.
- Mortgage pre-approval
House hunting is a lot smoother, if you have financing in place. The last thing you want is to find the home of your dreams without the resources to buy it. What are the odds that someone else would snatch it from your hands? It will work to your advantage if you have the option to pay up front.
The loan amount approved will also be your basis for your budget. You can go below the loan amount, but not over it.
Because the pre-approval process is now more complex and time-consuming, it is best to get pre-approved way ahead.
Do you have everything covered? Time to go house hunting.
Check out an online listing that not only offer a wide range of properties, but also other services that are useful and relevant to property buying, including a free valuation. Grab the opportunity to save on valuation cost.
We hope your enjoyed our article on house hunting. Are you a seasoned house hunter or just starting out? Share your stories in the comments.