5 things every first-time homebuyer needs to know
Embarking on the journey to purchase your first home is both thrilling and daunting. To navigate this significant milestone with confidence, there are a few essentials that all first-time homebuyers ought to know.“Your first home is more than just a place to live - it’s a stepping stone to building long-term financial security,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Choosing the right property in the right location can help you build equity faster, making it easier to move up the property ladder over time. A well-planned first purchase sets the foundation for future real estate success," he notes.
To help first-time buyers avoid some of the common mistakes, RE/MAX of Southern Africa shares the top 5 things to consider before making your very first home purchase.
1) You need more savings than you might think
While saving for a down payment is crucial, it's equally important to budget for all the additional costs that come with purchasing a home. These include the various closing fees such as the transfer duty and bond origination fee, as well as the moving expenses and possible maintenance or renovation costs to make the home more your own.
2) You can get pre-approval for home financing
Many first-time buyers don’t realise that they can receive pre-approval on their home financing so that they know upfront how much they can actually afford. There is no cost involved to do this – simply visit a bond originator and fill in some paperwork to get started. Not only will this help you budget more accurately, but it also shows sellers that you are a serious buyer, which can give you extra leverage if there are multiple offers on a home.
3) Don’t underestimate the cost (and work) on a fixer-upper
Purchasing a home in need of renovation offers first-time buyers a much more affordable way to enter the property market. However, it's essential to assess the scope of repairs, budget for renovations, obtain necessary permits, and plan for accommodations during the remodelling phase. With thorough preparation, transforming a fixer-upper can be one of the best ways to climb the property ladder faster.
4) Your credit score is more important than you realise
Your credit score significantly influences your home loan approval and the interest rates offered by banks. A higher score enhances your chances of securing favourable loan terms. Even just a 0.25% improvement on the rate the bank is willing to offer you can add up to being hundreds of thousands of Rands over the loan term. If your credit score is low, consider taking steps to improve it before applying for a mortgage.
5) A good real estate agent is worth their weight in gold
A seasoned real estate agent offers invaluable expertise, from identifying suitable properties to negotiating favourable terms. They can demystify industry jargon, advocate on your behalf, and recommend trusted professionals for related services like mortgage lending and moving. Their guidance can make the homebuying experience smoother and more efficient.
By keeping these considerations in mind, first-time homebuyers will be better equipped to make informed decisions and embark on a successful homeownership journey. “Never underestimate the importance of making a good first purchase – if you are ever feeling unsure, speak to a trusted real estate professional for some free advice,” Goslett concludes.