Regardless of how much stress they are under, first time homebuyers should avoid making costly mistakes
A home is perhaps one of the biggest purchases one will make in their entire life and the number of things one must consider before signing on the dotted line is immense – especially first time homebuyers. Knowing about a few common mistakes first time homebuyers make and how to avoid them can, however, keep you from being overwhelmed before you take your first plunge into the housing market.
1. Do not underestimate your budget
A crucial component many first time home buyers forget to consider are the variety of fees and charges that accompany the home purchase price. The additional costs home buyers can be saddled with include property valuation reports, buyer stamp duty fees, property taxes, property agent commissions, and home or fire insurance fees. If you are considering a resale property, you may also have to fork out money for renovation costs.
To avoid overspending, home buyers must be careful to not underestimate their budgets. Check on all the associated fees that come along with the home purchase price and factor this into your budget.
2. Carefully calculate your loans
Another savvy thing first time homebuyers should consider doing is, to work with established mortgage consultants to complete detailed home loan assessment.
Make sure that you are clear about how much you would be able to loan and how much your monthly mortgage costs would be. Also be sure to determine whether any restrictions on the loan amounts apply. It would save you a lot of time if you have all this information before you begin visiting potential properties.
3. Consider whether the new location fits your lifestyle
Sometimes the home that is the most affordable to you may not be one that is the most convenient and vice versa. Similarly, sometimes you may be caught between a home that is larger and more expensive or smaller and more affordable. Before you make a decision on which home to invest in, carefully consider several factors that will make a difference to you after you make the purchase.
For example, will your new home be situated in a location that is difficult to easily access? Would commuting to work and school be a chore? Are you planning on having a family or enlarging your family that would cause you to need more space? What are the amenities available in the area? Does the neighbourhoods have good schools? Are there places where you can purchase daily essentials nearby? Is the home close to your parents, in-laws, siblings or friends?
Essentially, can you maintain a lifestyle you are comfortable with in the new home? These are important factors to weigh before you pick one property over another.
4. Do not skip due diligence
Buying a home is a major commitment and the last thing a buyer would want to do is deciding on a property based on their heart and not their head. It is vital to conduct research into the home you are considering before making a decision and a variety of resources are available to assist you in considering the pros and cons of any given property.
The URA Master Plan is one such resource that you can tap on to learn about future developments that might impact the value of the home you are considering. The Master Plan helps to identify upcoming projects that may raise the value of your new home such as future MRT lines. You may also decide other matters, such as whether you are willing to live with the construction noise and disruptions of projects like trains stations, by perusing the Master Plan.
It is also prudent to check past transaction prices in the area your new home is located so that you ae better appraised about how much the property is worth presently and how much is could potentially be worth in the future. If it appears as though everyone in the area is selling their property, determine why they are doing so.
5. Work on a realistic timeline
First time homebuyers should be aware that the buying process is lengthy one involving several parties.
Different properties have different timelines between when you decide on a house to when you complete the purchase. For example, if the property is still under construction, you will be looking at a progressive payment program. Completed properties typically take 12 weeks before the house is yours, from the point you exercise the purchase agreement.
This type of timeline typically requires the buyer to give 1 per cent option amount in cash on day 1. The buyer then has until day 14 to pay the remaining 4 per cent in cash – this will launch the completion period spanning 10 to 12 weeks. Within two weeks of day 14, buyers will need to pay stamp duties. Finally, two weeks before completion, the buyer would need to make payment for the balance 15 per cent from savings in their Central Provident Fund or cash downpayment.
It is important for home buyers to set a realistic timeline, be aware of payment milestones and ensure they have enough at each due date to make payment, to avoid unnecessary delays or disappointment.
6. Do not skim over the home inspection process
Lastly, first time homebuyers should allocate enough time (minimum 30 minutes) to thoroughly inspect the house and avoid glossing over the inspection process. When the house is carefully and properly inspected, home buyers can potentially save money in the long run since they are better appraised of what they are committing to.
Home buyers should inspect each room and space within the home and keep an eye out for spaces that could be unsafe or harbour costly pest infestations. Buyers should further check if the house gets adequate sunlight and determine whether the home gets too hot during the day – this might possibly cause higher electricity bills required to cool the home.
In addition to this, it will be sensible to explore the neighbourhood surrounding the home to discover what amenities are available in the community, and whether the location is accessible and suits you and your family.
Follow these six tips and prepare to buy a new home properly to make the home-buying process a smooth sailing one.