So you are ready to buy your first home? First of all congratulations! Buying your first home and becoming a property owner can be a very exciting time. However, it can also be overwhelming; and understandably so, given that a home is probably the biggest purchase you will ever make.
Buying a home can take a lot of time, effort and patience, but with the help of these 5 easy to follow steps we can make your home buying journey more manageable and enjoyable – after all, buying your first home is meant to be fun!
Step 1: Start the search for your first home as early as possible
Once you have made the decision to seriously explore buying your first home, it’s time to start your search. Begin by going through websites such as realestate.com.au or domain.com.au and top publications such as magazines and newspapers that have real estate listings and take note of homes that you are interested in.
As this is your first home, think about what key features these properties have that appeal to you. For example, think about the number of bedrooms, bathrooms, yard space, etc. you require in your home. Are there any community elements such as schools, supermarkets, gyms, etc. that you want the property to be located near?
Once you have identified a few properties that meet the criteria for your dream first home, keep an eye on how long they stay on the market for and also make note of changes in the asking price to the final sale. In doing so, you can get a sense of housing trends in Frankston and the surrounding areas that you may be interested in and get a gauge of what you will be in for moving forward.
Step 2: Determine how much you can actually afford
It is ultimately up to you to realistically reflect on how much you can actually afford to spend on your first home. A good place to start is to review your finances thoroughly. Sit down and really consider the following areas of expenditure:
- Income – explore all avenues where you are currently receiving payments e.g. wages, interest on investments, etc.
- Living Expenses – areas that are necessities for your current living situation e.g. rent, bills, insurances, loan payments, etc.
- Lifestyle Expenses – all the fun things that build your current lifestyle e.g. eating out, shopping, entertainment, etc.
This activity will give you a clear understanding of what your living expenses are, which is very handy when you get to step 3.
Step 3: Get pre-approved for a mortgage
Now that you have a clear understanding of your finances, you need to know how much you can actually spend, by figuring out how much you can borrow from the bank. Begin by looking at a mortgage calculator – you could use a bank or a broker’s, to get a feel for what figures you could look at borrowing for your first home.
Then it is time to reach out to them to get pre-approval. To get pre-approval for your first home, you will need to provide extensive financial information to your bank or broker. This could include things like:
- Income and expenses
- Loan to Value Ratio
- Credit History
- Employment History
- Significant Changes in Finances
- Credit Card Limits
The mortgage broker or bank will review this information and tell you how much you can borrow for your first home while fitting in with your current circumstances. In turn, this will tell you the price range of the homes you can consider.
Step 4: Explore local Frankston real estate agents
Look for reputable and licensed real estate agents in the Frankston area or surrounding suburbs that you are looking to buy your home in. Each agency should have a local area specialist that will be able to help you immensely in your home buying journey and point you towards properties that will meet your criteria that you listed in step 1 as well as your budget determined in step 3.
A great real estate agent will be invaluable as they can provide you with professional advice and guidance throughout the whole process and also keep you up to date with any new listings in the Frankston area that may be of interest to you.
Step 5: View properties and make an offer
This is it! You are just about ready to make an offer – exciting times! Go over your current list of ideal homes that meet your requirements from Step 1. Which among these homes are still on the market and are within your price range? Attend open houses or organise a private inspection of these homes, until you find the right one for you.
It is important that you take as much time as you need here – we know it is exciting to buy your first home but you also don’t want to rush the process. Don’t fall to pressure from outside sources, make sure you are comfortable with each step before you sign on the dotted line.
Visit the property multiple times if you need to and get the necessary inspections done so you have all the information. Then, work with your real estate agent to negotiate an offer based on the value of comparable homes within Frankston or the surrounding suburbs. Put in your offer, and then fingers crossed you will be putting a big red sold sticker in front of your first home before you know it!
The Bottom Line
Of course the home buying process is quite intricate and involves a lot more steps than just the 5 mentioned here. But, these 5 steps to buying your first home are a great place to start. The sooner you complete them; not only will you put yourself in the best possible position, but you will be a great deal closer to purchasing your dream home!
Will Bell Mortgage Broker is a mortgage and finance broker based in Frankston specializing in residential home loans. Will is all about the average Australian understanding just enough of the broader economy to take action on your own personal economy. He is the host of the My Personal Economy Podcast which you can check out here.