Buying a property is not a decision that one should make lightly. This is not a small purchase and carefully thinking it through is essential. However, it is not uncommon for people to rush and regret this choice later on. In order for that not to happen to you, you need to familiarize yourself with certain aspects of purchasing a property. You should do these eight things to avoid making a huge mistake that many other individuals made.
Find out your credit score
Unless you’ve saved enough money to buy a property with cash, you will have to look for a loan. Your credit history is the biggest factor in whether you will get approved. That is why you should find out your score before you apply for a loan and do your best to fix it if it is not good. With an improved credit score, you can get a better deal with lower interests.
Shop around for the right lender
The chances are that you will be turning to a bank for a loan. Seeing as how there are many banks out there, you should shop around a bit and not take the first offer you get. For example, look at the annual percentage rate each lender offers and see what the best option is. These options may also be helpful later on, especially if you’re purchasing a fixer-upper, as you may end up needing further financial help outside of the original mortgage you used to purchase the home in order to fund any repairs or renovations. While comparing personal loans is easy, wouldn’t it be more convenient to use the same lender that provided your mortgage? With that being said, it is pretty easy to see why fully understand your lender’s financing options before you even start looking at prospective properties.
Be aware of what you want
Once you are aware of the budget at your disposal, you can start making a list of the features you want the property to have. From deciding how many stories it will have to the number of bedrooms and bathrooms, there are many aspects to consider. Are you a young family with a goal of adding more members? Location is important if you want a good school and various amenities nearby. Are you planning your retirement? You might want to consider a smaller property that doesn’t need a lot of upkeep. Are you in the renting or flipping business? See which elements give you the biggest bang for your buck. Plus, you will probably see at least half a dozen properties so don’t go for the first one you see if it lacks an essential feature.
Rely on professionals during the hunt
Knowing what you expect from a property will make the hunt much easier. Something else you should do is get in touch with professionals who can help you out. First of all, find a good local realtor that will scour the offer and show you only those properties that meet your demands. Then, hiring a reliable conveyancing lawyer will also come in handy as they will take care of all the paperwork once you decide to purchase the property.
Inspect the property
Property inspection is another area where you could use an expert’s help. Bring along a professional who can ensure the electrical work and plumbing are up to code. This should prevent various unexpected issues and additions to your budget. Moreover, you should check for mold and drainage. For instance, visit the property when it’s raining to see how the gutters are performing and look for leaks. Make multiple visits before you commit to the purchase to see how noisy the neighborhood is or how much the temperature varies. Take photos of everything in case you need proof later on. Finally, don’t be afraid to ask about the issues that might be bothering you.
Expect the property to need work
Some people look for a property that they can move into straight away. While that is a possibility, be aware of the fact that most properties need at least some work. Perhaps you like everything but the color of the walls. That means you have to find the time and money for a repainting project. Maybe the layout of the bathroom does not suit your needs. Remodeling the bathroom will cost you. No matter how small the change you might have to make, make sure your budget is big enough. The last thing you want is to start a project and not be able to finish it properly.
Familiarize yourself with the monthly expenses
People often tend to neglect the issue of monthly expenses when creating their budgets. The down payment aside, they often think only about the mortgage payments. What they ignore are the various other costs of homeownership. For one, you will need to pay bills on a monthly basis. Then, you need to think about various property taxes, homeowner’s insurance, and potential homeowner’s association fees. What is more, you need to remember the closing costs, which are sometimes as high as 5% of the home purchase. Finally, as the homeowner, you will have to pay for all repairs and maintenance that the property needs.
Notice the red flags
While your inspector should make you aware of these issues, there’s nothing wrong with familiarizing yourself with red flags. For instance, a crack wider than ½ inch might indicate an unstable foundation. Water stains, mold, and insect infestations are all signs that you should not ignore. Moreover, notice if there is fresh paint or a strong air freshener. These might be in place to hide bigger issues.
Seeing as how purchasing a property is no small feat, you’ll want to avoid making a huge mistake. Keep the eight previously mentioned tips in mind and you’ll do just fine.
