NEW YEARS RESOLUTIONS FOR PROSPECTIVE HOME BUYERS

The beginning of any New Year comes with a lot of goals: to get fit, be more outgoing or get your financial house in order. For many people, getting your financial house in order might include buying a new home. Although owning a home is considered part of the all Australian dream, buying a new home is often easier said than done, especially when life takes another unexpected turn. Something all too familiar to each and every one of us.
The beginning of the New Year is a good time to take a look at what it will take to become a homeowner. Even if you’re up to your second or third investment – Here are some tips to help you get on your way

• LIVE MORE FRUGALLY
It doesn’t matter if money is tight or if you’re well-off. There’s no reason not to be frugal when you can. Saving money not only helps you and your family in the future, but it also means that you will have money left over to spend on little treats or just for a rainy day.
Living frugally doesn’t have to mean counting every cent; it can mean saving the excesses you gain from greening your home, growing some of your food rather than buying it all, fixing and reusing items around your home that aren’t totally broken or dead, or cutting your daily eating out habit, down to an every-other-day habit.

• KNOW YOUR CREDIT RATING
If you have a poor credit rating, the two best ways to improve it are to pay your bills on time and push yourself to reduce your credit card balances. A good credit rating increases your serviceability, making it easier to get a better interest rate.

• GET YOUR FINANCIAL HOUSE IN ORDER
Once you have an idea what type of home you’re looking for, figure out how much home you can afford. Since the majority of buyers finance their purchase, it’s important to take care of this piece of the process up front. Develop a budget that includes money for a down payment, closing costs and taxes, as well as the monthly mortgage payment. Meet with a mortgage broker to get pre-approved before you start house hunting.

• GET YOUR DOCUMENTS IN ORDER
Filling out a mortgage application is financially intrusive to say the least, but, if you have all your relevant forms handy the process will be a lot smoother. It can also help you get a better sense of where you stand in terms of loan qualifications.
A quick list of the most important documents you’ll need include identification, tax returns, income statements, recent pay stubs, credit card statements and bank account statements.

• PAY OFF DEBT WITHIN REASON
Often when holiday excitement dies down the buyer’s remorse and holiday debt hangover sets in. If you’re sitting on debt, commit to paying off enough to improve your debt-to-income ratio.
Eliminating debt altogether is ideal, but it may be unrealistic if you also need to save for a down payment and closing costs. Instead, focus on bringing your debt-to-income ratio below 36% which will still qualify you for favourable mortgage programs and rates.

• SEARCH WITH FINANCE APPROVAL AND OPTIONS
Searching without finance approval can only lead to disappointment. It’s really frustrating to watch the home you want to buy go to someone else whilst you’re arranging your finance. In any case how do you know how much you can afford if you haven’t got finance approved in writing?

Don’t risk signing a contract without finance approval or obtaining expert advice from your finance broker. Losing your deposit if a bank does knock back your loan will be a very costly mistake.
Mortgages are not one size fits all either. It’s important to choose the right mortgage for your situation. The type of mortgage that you select may make a big difference in your monthly payments and the overall cost of your loan. While most borrowers today are financing their homes with fixed-rate mortgages, for those who plan on living in their home for less than five or seven years or those who can withstand payment fluctuations, an adjustable-rate mortgage may make more sense.

• CONSIDER A REFINANCE

Refinancing has been on the minds of many homeowners this year and now is the time to decide whether it’s right for you. If refinancing is an option, take a look at current mortgage rates and examine your rate and term to see if you might be able to secure a better rate. Better yet, if you have built up enough equity in your home to buy the next property then you are already in a good leveraging position.

• VISIT OPEN HOUSES
Visiting open houses is a great way to get your feet wet and start easing into buying a home. However, it’s never a good idea to visit homes you can’t afford – that can give you unrealistic expectations.
Checking out open houses early in your search gets you familiar with your price range and what’s available on the market now. That way you can start to decipher what’s on your must have list and what you can give on. Search for open houses and take a look at just one property this weekend to get the ball rolling.

• FIND THE RIGHT REAL ESTATE AGENT
It’s never too early to pair up with an agent to help you in the home buying process. Searching early also gives you time to settle on the perfect agent for you. Interview multiple people if that’s what to takes to jell with someone. Your agent should understand your goals, personal timeline and most importantly put your best interests first and foremost.

Remember, a good mortgage broker will be happy to work with you to ensure you have helpful money habits and access to the right products and structures to allow you to achieve your goals. For an honest and unbiased opinion, talk to Think and Grow Finance today on 03 8390 5855 or email mitesh@thinkandgrowfinance.com.au
Wishing you the best of luck in this New Year, and all the warmth, happiness and goodness to come in your newly purchased home!