Considerations When Taking out a Home Loan for the First Time

Buying your first home is exciting business, but it’s also a source of stress and uncertainty for those who have never taken out a mortgage before. But don’t let that discourage you. You’re about to pass an important milestone in life, and as long as you do your research and take the proper precautions, you’ll have nothing to worry about.

Begin by running through this important list of considerations:

• Take Your Time.

The most important thing you can do in preparation for your first mortgage is to slow down and take time to process everything. It’s easy to feel rushed – especially when you have to be in a new location by set date to start a new job, for example. However, rushing leads to missteps. Remember, you can always rent a room for a few weeks or even months if necessary. The last thing you want to do is rush into a 20- or 30-year mortgage when you’re not convinced that a particular property is the right one for you. Just remind yourself that homes go on and off the market perpetually. Even if there are no ideal properties available right now, there certainly will be in due time.

• Don’t exhaust your savings on the down payment.

This is not an attempt to go against traditional wisdom. Make no mistake: a substantial down payment reduces the principle and cuts down on the amount of interest paid over the life of Smartline home loans. However, once you move into your first house, you’re going to need to buy furniture, appliances, tools and a host of other expensive items that home ownership requires. Better to take this extra money out of your down payment and pay a low mortgage interest rate on it than to pull out the credit card and pile on high-interest debt. You can always increase your monthly repayments down the road. 

• Ask the Sellers to See Past Utility Bills.

One of the most essential considerations for first-time home buyers is the feasibility of repayment. You want to make absolutely certain that you can afford this house on a monthly basis, and that means taking more than your mortgage repayment into account. Ask the current owners if you can look at their utility bills so that you can cut the guesswork out of how much it takes to heat, cool, power and supply water to this house. Ask for past bills from all seasons (or better yet, from a full calendar year) so that you can accurately determine how much you’ll be paying on top of your monthly mortgage 

payment. 

• Scrutinise the Taxes.

As with the utility bills, the annual taxes on the property are going to add to the burden of repayment. Ask to see past property tax statements from several years to help you predict upcoming trends in tax as well. It is also a good idea to speak to your realtor about property taxes in specific cities and neighbourhoods.

• Request a Record of Past Improvements.

Regardless of whether or not you plan to do any remodelling, you will want to know what the previous owners have done up to this point. Sellers are prone to making a few improvements before they list a house so that they can get a bit more for it. This is all well and good as long as they are using superior materials. If, on the other hand, a closer inspection of their handiwork reveals second-rate craftsmanship, you may have to make additional repairs to the house after you purchase it. Those are going to cost you.

About the Author: A company with offices in most major regional areas in Australia, Smartline is one of the leading providers of financial solutions such as home loans to customers all over the country.