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First Home Buyers Checklist
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First Home Buyers Checklist
Are you looking for your first home or just need more information on how to get your first home loan? Don't worry you're not alone.
This article will outline some tips and hints on how to get your first home loan. There are literally thousands of Australians, young and old, looking to buy their first home. A lot of people don't know where to start or what information
This final checklist will help you out when going for your first loan to make sure you don't miss anything.
6 Step buyer's checklist
1) How much can I borrow?
2) What are the costs?
3) Which loan is right for me?
4) Get pre-approval
5) Search for a property
6) The buying process
1) How much can I borrow?
How much you can borrow is often referred to as your "borrowing power", which is basically how much you can borrow to finance your house or property purchase.
Your borrowing power is assessed on a number of points:
- Your income
- Your savings
- Current financial commitment
- Credit history
- Living expenses
- Guarantors
For a rough guide on how much you can borrow, check out our loan calculator by clicking on the above calculator (it takes about 3 seconds to calculate).
2) What are the costs?
Once you have done a rough calculation to determine how much you can borrow, you'll need to factor in additional charges that apply when getting a mortgage.
First West Home Loans have a policy of highlighting all costs that are involved when organising your loan. We make sure all costs are laid out for you to see, so there are no surprises!
There are a number of different charges and costs that you will need to factor in when getting your loan, which include:
- Deposit. You can have as little as 2% deposit to get your home loan. There are many factors that can affect how much deposit you need
- Taxes
- Stamp Duty (mortgage and property purchase) - This amount is $0 for those first home buyers who purchase a house or land for $250,000 or less
- Legal costs
- Insurance
- Registration fees on a mortgage
3) Which loan is right for me?
There are heaps of loans available with different features and fees to be considered, such as home loan rates, mortgage offset, redraw and ongoing fees to name a few. First West Home
Loans actually search for and organise the most suitable loan for you and the best thing is we don't charge you a cent for this service!
You need to consider a few things when deciding what loan to take, including;
- Can I make additional repayments without being charged extra?
- Can I make repayments via direct debit, ATMs, Internet and phone banking services?
- Can I have a ''mortgage offset facility' - which allows me to offset funds in an account against my home loan?
- Can I redraw funds at any time?
- Will I be able to restructure my loan in the future?
- Are there home loan fees?
4) Get pre-approval
Pre-approval is a term that means your loan has been approved in principle (given that you have met lending prerequisites). From here, we work with you to complete relevant paperwork to move the loan through to the approved status.
This pre-approval means:
- You have an idea of how much you will be able to borrow - The amount you have been pre-approved shows how much you will have available to purchase with
5) Search for a property
This is the exciting bit! By now, you will have no doubt started thinking about where you want to live. With your pre-approval sorted, you now have a better idea how much you can spend. A useful site to help select a house in your area is www.realestate.com.au.
Here are some more useful factors to keep in mind when selecting your property:
- Price changes in recent years - Value of prices per suburb
When going to view houses, you should take a checklist with you so that you can compare each house you view on similar points. Make sure you're thorough when inspecting a house.
Some things to compare when looking for your home include;
- Price averages for that area
- Growth rate for that area
- Close to public transport
- Close to shops, schools, major roads
- Are any repairs needed?
- Number or rooms, bathrooms, toilets
- Heating/Air Conditioning
6) The buying process
The buying process is the final and the most important step to home ownership. This process can be broken down into 4 separate stages:
a. Making an offer
There are two different types of offers you can make:
i) Auction - If you are buying at an auction, you are required to pay a deposit (usually 10% of the purchase price) immediately ii) Private - If you are buying privately, you are usually required to pay a holding deposit (can be any where between $2,000 and 10% of the purchase price)
b. Contract of Sale
- The contract of sale (which is prepared by the vendor's solicitor or agent) outlines your offer
- the date of settlement, and
- any conditions that must be met before the sale goes ahead
It's best if you discuss the Contract of Sale with your solicitor before you sign it.
There are two kinds of offers - unconditional and conditional.
Unconditional offers
This is outright offer to purchase land or property. At this stage you should be absolute certain that this is the land or property that you want and that you have access to finance for the purchase. Upon acceptance of your offer by the vendor, you are obliged (legally) to go through with the sale.
Conditional offers
Conditional offers are similar to unconditional offers, in the fact that it is also a legally binding contract (provided that all of your conditions are satisfied). The only way that the conditional offer contract can be broken is if one or more of the conditions are not met.
c. Finalise loan
Once you have pre-approval we can work your loan through to the finalised stage by completing all of the necessary paperwork and then on to settlement.
d. Settlement
The Contract of Sale highlights the length of time you have to settle the conditions. When all conditions are met, the offer becomes unconditional. This is when the sale goes ahead and you can pick up the keys to your new place!
Do you qualify for the First Home Buyers Grant?
Do you need help getting your first home loan or assistance with the First Home Buyers Grant? Don't worry you're not alone. It's often hard to figure out where to start when looking for your home loan. There are so many options and so many mortgage providers to choose from. First West Home Loans specialise in helping first home buyers with the process of getting their first home. We guide you through the steps needed to successfully secure finance.
There are many incentives available to first home buyers in Australia, including the first home buyer's grant, which is $7,000. In addition there is also the option of having no stamp duty on your purchase.
As with all things there are conditions attached. To be eligible for the First Home Owners Grant (FHOG) there are a number of criteria that must be met including:
- You must be an Australian citizen or permanent residents and you must be buying or building your first home
- Neither the applicant nor their spouse (or de facto) of the applicant must have owned and occupied a home after 1 July 2000
- The FHOG is not means tested and there is no tax payable on the first home owners grant
- Neither the applicant nor their spouse (or de facto) must have claimed this grant previously
- There are minimum periods of occupancy required
- Applications for the grant must be made within 12 months of completion of construction or settlement of the home
- Joint applicants are restricted to a single application for a single property and only one payment of $7,000 will be made
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Get Fast Approval For A Home Equity Loan
Getting a home equity loan is easier than ever before. However, as with any loan, there are certain steps that every borrower must take in order to ensure loan approval. While having equity in your home is necessary to get approved for a home equity loan, it is not all that is required.
Make Sure You Have Enough Equity Seems simple enough, but if you haven't built up enough equity in your home, you won't be approved for a home equity loan. If you made a large down payment at the time you purchased your home, this probably won't be an issue. However, if you made a smaller (or no) down payment on your home, take time to see what prices similar homes in your neighborhood are fetching. This will give you a general idea as to whether or not to even begin the loan process.
Check Your Credit Don't wait until your lender checks your credit to head off any questionable items on your report. Is your credit score less than perfect? Take time to pay off questionable items and to challenge any erroneous items found on your report. Doing so will not only help you get approved for a home equity loan, but will ensure a more competitive interest rate.
Take Your Time If your credit report required a little maintenance - and you have the luxury - take your time before applying for a home equity loan. The more time you can put between any negative marks and your loan application, the better. In addition, take this time to pay down other debts (if possible) to improve your chances for approval.
Stay Current Even if you find yourself in a financial bind, try to stay current on your bills. Are you planning on using your home equity loan to fend off financial disaster? If you can't stay current on your bills until your home equity loan is approved, call your lenders before you are late, and set up payment arrangements until your loan is approved.
Be Prepared Like all loans, home equity loans require a large amount of paperwork. Payment stubs, W-2's, and tax returns are some basic documents you should have handy in order to ensure that your loan is processed - and approved - as quickly and painlessly as possible.
Scott Chiaradonna is a mortgage broker from Cape Cod, MA. Scott is a private consultant for AskMrMortgages.com where he shares his extensive knowledge of the ins and outs of the mortgage industry through online articles and via the AskMrMortgages blog.
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