Getting your foot on the property ladder is an incredibly exciting period and the start of a new chapter in your life. Buying a house can also be intimidating as it is an enormous purchase to make and there are lots of stages to go through which can be complicated and confusing. It means that first-time buyers often have similar questions when going through the process and it can be difficult to find this information out on your own. With this in mind, here are a few of the more common questions that first-time buyers have, along with answers which should alleviate concern and help you to find the perfect property.
One of the most common questions that are asked is how much money should be spent on a first home. This is difficult to answer as it will depend entirely on your financial situation, the current economic climate, demand for housing, how big the house is, where it is located, and so on. As a general rule of thumb, you will need to put down somewhere between 5% and 20% of property value. Plus, the higher the percentage, the more affordable the mortgage will be.
Many people fear applying for a mortgage as it can feel quite invasive. Essentially, a mortgage provider will want to make sure that you will be able to afford repayments which means that they will need evidence of your income and seek information on your outgoings such as debts, household bills, childcare, and other outgoings. In terms of proof of income, this may involve pay slips or tax returns if you are self-employed.
A mortgage pre-approval is handy to have as it is a letter from a lender that states that you meet the standards for a loan after an in-depth review of your finances has been carried out. Having this pre-approval will strengthen your offer and could speed the process up, as well as let you know how large of a loan you will be able to take out. Before you start the process to obtain a mortgage pre-approval letter, it is worth checking your credit score and taking steps to improve this if necessary. You will then either be approved, approved with conditions, such as providing extra income verification, suspended, where additional questions need to be answered before being approved or declined.
If you are unable to get a mortgage, then it can be highly frustrating and upsetting. In this situation, you could consider a guarantor mortgage where someone (such as a parent, friend or guardian) will be responsible for paying the mortgage if you are unable to. While this can be a good solution, it is essential to be careful when entering this type of mortgage as it is a legally binding agreement dealing with a lot of money. Make sure that any guarantor will be able to afford the payments if needed and that they are happy to enter the agreement.
You may think that there is nothing that you can do if you have bad credit or not much money to put down as a deposit, but there are always options. The options include seeking an FHA loan which has more lax criteria to qualify than other mortgage products. You can find out more about this type of loan and whether or not you meet the minimum criteria by looking here: https://www.crediful.com/fha-loan-requirements/.
It is important to remember that it is not just the monthly mortgage payments that you will need to consider. Other costs involved in buying and moving into a home include survey costs, solicitor fees, removals costs, insurance, mortgage arrangement and valuation fees, decorating costs and closing costs.
These are the main questions that first-time buyers have when looking to purchase a home. It can be a stressful and highly complicated process, so it is no surprise that people are often fearful and have a lot of questions about different aspects of the process! Hopefully, this information will help to clear a few things up and allow you to enter the real estate market with confidence so that you understand each step of the process and so that you can find the perfect house for your needs.