Get ready to buy your first home!
Category Property Ownership
There's an old Chinese proverb which says: "The best time to plant a tree is 20 years ago, the next best time is today." It's the same with property; the best time to step into a property of your own, is NOW!
Buying property for the first time, is like falling in love for the very first time when you experience that marvellous excitement, coupled with the challenges of starting something new. Fortunately (and unlike falling in love) there are professional people that will assist you in the home-buying process. You've made the decision ... what now?
Before you look!
It is important to take a few 'baby steps' in preparation for home-ownership. You especially don't want to start looking at homes that might be out of your reach, because the disappointment when your home loan is declined might let you lose the appetite to own your own home.
Financial Institutions will look at two things before granting a home loan: The value of the property and your ability to make the monthly payments. Affordability is based on the amount of money you have left after all your bills have been paid, as well as that the monthly repayment does not exceed 30% of your (and your spouse's - if applicable) combined gross income.
In preparation to buy, there are three vital things to do. Firstly, start saving as much as you can to cover a deposit and the transfer-related costs. You might qualify for a 100% bond, but the more you can put down, the less your monthly payments will be. Secondly, get your credit score. If it shows defaults and late payments, take 6 months to fix it so that your credit record looks squeaky clean. Thirdly, make a list of your monthly income and expenses and get in touch with a mortgage originator, like ooba, to assist you with a pre-approval. Now you will know for how much you can buy! A written pre-approval will assist your estate agent in guiding you correctly and it will give your offer an edge over possible other offers the seller has for consideration.
Finding your home!
This could be a daunting task if done on your own and its best done with the professional assistance of a qualified agent. The first step is to decide on an area (or suburb) that you would like to live. Ask yourself: Why here? Drive through the area to see what happens there at different times of the day; early morning traffic, when the schools come out, at night, etc. This will give you a feel for the area and you can decide if it fits in with your lifestyle; are you looking for a family-orientated area or a new development geared for younger, single individuals? Ask your estate agent to give you a profile and crime stats of the area. Check and recheck! The location of your property will determine its growth in market value and saleability in future.
It is good to compare homes for sale in the same price bracket and to check the websites of real estate agencies (like www.huizemark.com) and major property portals but beware of over-doing it. If you have found a place you want to call 'home', then buy it! Procrastination will result in you losing the property you liked best.
Inspect the property thoroughly before putting pen to paper. Ask the agent to provide you with the Property Disclosure Form signed by the seller and so familiarise yourself with possible defects that you cannot see with the blatant eye. Decide if you are willing to accept the house with its flaws, and if so, do you have the funds to fix the urgent items? Understand that the seller is not obliged to rectify the faults but could do so with negotiation. You may consider employing a Home Inspection company to give you a condition report.
Whilst looking at properties, keep in mind that you will most likely not be buying your dream home this first-time round, but that it is a stepping-stone to getting what you eventually want.
Finalise the deal!
The time has come to make a written offer to the seller. Ensure that everything you want, and all promises made by the agent is put on paper - if not, it's not binding. The seller will have a timeframe in which to accept your offer, after which time the offer will lapse. During this allocated time, you may not put in an offer on another property; should both be accepted, you will have to buy both!
In terms of the offer you will have a specified time in which to obtain finance. Be sure to have the required documents ready for the mortgage originators - they will work hard to get you the best interest rate available from all the different financial institutions. Do not attempt to get finance on your own; your own bank might not offer the best rate.
If you earn between R3 501 to R22 000, you might qualify for a government housing subsidy for first-time home buyers which aims to assist with purchasing a home. The subsidy is paid to your financial institution and will reduce your monthly loan instalments, making it more affordable to purchase a home. It is called the Finance Linked Individual Subsidy Programme, or FLISP in short. The size of the subsidy granted to you will depend on your earnings, with a maximum of R121,626. Your mortgage originator can assist you and you can get more information on how it works from the Department of Human Settlements' website.
It takes time!
You're excited and just want to move in! "But wait, there's more!" There is still a process to follow before eventually getting the property registered in your name - this could take three months or longer and depends on many factors. Your finance must be finally approved by the financial institution and the mortgage bond documents must be drafted and signed. The existing bond must be cancelled. The conveyancers must pay the duty to SARS, get rates clearances, draft the transfer documents for signature, to mention only a few. It's a long and expensive process (see related article on www.huizemark.com ), but all to ensure that your ownership of the property and the rights of the lender are secure. You will need funds for this process to be completed, so its best to ask your estate agent for an estimation of costs as soon as you have decided which property to buy.
There is nothing quite like the feeling of crossing the threshold of becoming a home-owner, and stepping into a home you can call your own. That is a moment of pure magic - in that moment it dawns on you .... You're home!
Author: Adrie Barnard