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6 Things to Consider Before Buying a House

March 29th, 2017 4:38 AM by Jackie A. Graves, President

You’d think, considering how expensive it is to buy a house, that everyone would take time to research, to equip themselves with the knowledge to ensure they are making the right decision.

To rule out any opportunity for error.

But time and time again, buyers become emotionally invested in a home, buying the 1st or 2nd property they have viewed, with little understanding of the market, whether the price is right and underestimating the overall expense.

Here are six important things you should consider before buying a home:

How accurate is the sales price?

What’s the true cost of buying?

How safe is the property?

Is the property adaptable?

Are there any building defects?

Is the location right for you?

Research shows that you need to commit to a house for a minimum of 5 years for it to become financially viable. It’s an investment that could set you up financially, placing you in good stead to upgrade in the future. Unless, of course, you fail to do your homework. A bad purchase could be the greatest financial mistake you’ll ever make.

So – to avoid the latter – here are the 6 most important things you should consider before buying a house:

1. How accurate is the sales price?

If you want to avoid paying an over-inflated price for a property, you need to understand the local market. Research the sold prices of at least 5 similar houses in the area. You can scour sales results in the Sunday newspaper, or search online via realestate.com.au or Domain. Take into consideration the size of land and condition of the property. To eliminate some of the hard work, sign up for the realAs app which will bring accurate price predictions to you.

2. What’s the true cost of buying?

It’s not just the sales price you need to worry about. Understanding the total costs associated with buying a house is an important part of the buying process. There’s stamp duty, agent fees, bank and legal fees, in some cases Lenders Mortgage Insurance if you’re borrowing more than 80% of the property. You should also consider the ongoing expenses such as mortgage repayments, council rates and insurance.

 

Stamp duty varies from state to state. It’s generally calculated using a sliding scale of taxation based on the value of the property. Calculate the accurate cost for stamp duty for a particular property. If you’re a first homebuyer, you should be eligible for stamp duty concessions, but these vary considerably depending which state you live in.

Legal fees should cost between $1500 and $3000, depending on the complexity of the purchase. A conveyancer will prepare the necessary documentation and manage the settlement process for you as well as providing advice about the specifics within a sales contract.

Rates are calculated according to a property’s value, location, type and features. Rates vary considerably, so it’s a good idea to find out what you’ll be paying before buying a house. Call the local council or ask the sales agent responsible for the property.

Mortgage repayments. Over the lifetime of your loan, these will be your most expensive cost. Consult a mortgage broker or research online to explore the different loan options before buying a house. It’s also a good idea to draw up a personal budget. Make sure you understand your outgoings. Realistically, what repayments can you afford?

Insurance costs are calculated based on risk. Properties within high crime pockets, or areas susceptible to flood or bushfires will have a higher insurance price tag. For contents insurance, you may want to include fixtures and fittings when obtaining a quote.

3. How safe is the property?

Is the property located in a high-risk flood or bush-fire zone? What are the crime stats for the area? Some properties are more vulnerable to robbery than others, especially if they’re located in high crime areas, or they have little security and easy street access.

4. Is the property adaptable?

Your situation can change dramatically over 5 years, so it might be a good idea to check the restrictions associated with a property. Down the track, you may want to renovate or expand. What’s the classification of the property? What are the setback regulations from the street and bordering areas of the lot? Are there strata or height restrictions?

5. Are there any building defects?

Repair works for shoddy renovation works, or properties with faults or water damage can become expensive. If you don’t have the time to organise a building inspection, read our blog post 6 warning signs why you shouldn’t buy that house for tips of what to look out for when viewing a property.

6. Is the location right for you?

You may have fallen in love with the house, but location is equally important. Make sure the neighbours are friendly, and that nearby facilities suit your needs. Listen out for noise pollution or any unusual disturbances that could become a headache to your everyday lifestyle. Read our post 5 Location Nightmares to avoid the most common location mistakes.

 

In Short…

Your home should be one of your biggest investments, so don’t make the mistake of ‘buying blind’. It’s easy to feel pressured by time, competition and market conditions, but these factors should not become an excuse for making poor decisions.

Keep this checklist with you when viewing properties and make sure you have all the answers before buying a house.

By by Gemma H - To view the original article click here

Posted by Jackie A. Graves, President on March 29th, 2017 4:38 AM

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