This post was most recently updated on September 19th, 2023
[A collaborative post]
Have you ever considered the most important factors when buying a house?
I have mentioned in my dream pantry organization that I would like to have my dream home in the future. Purchasing a ‘dream home’ is one of those life accomplishments that is at the top of nearly everyone’s bucket list, right?
Yet, finding your dream home comes with different considerations than any other real estate purchase. I realize that. As a first-time homebuyer, the entire home-buying process seems like a daunting task. Oh yeah, it’s not only about the interior design (I wish)!
You’ll likely be aiming to stay for the foreseeable future. You’ll want to find a house that will keep you and your family happy for the long term.
Factors To Consider When Buying A House
If you have the same dream as me, or perhaps you’re planning to buy your first home next year, or you have a ready budget to buy your first home this year, do you know where to start first? Do you know what to consider before buying a house?
For starters, when it came to buying a home in 2021, UK first-time buyers offered more choice of 90% mortgages after several banks and building societies launched 90% home loans in February 2021.
There are, after all, a lot of things to consider before buying a house.
Whether you are a first-time homebuyer (like me) or a seasoned investor, here are some of the most important things to consider when buying a house:
Know your financial
Of course, before looking at properties, you need to save for a deposit, right?
You won’t be able to buy a house until you know what you can afford based on your personal finances. If you have a steady income, it’s not that hard to save money every month.
In fact, young people in the UK have found it difficult to save up a lump sum of money – with more than half of 22 to 29-year-olds living with no savings at all. The cost of renting is putting pressure on those who want to live on their own, according to BBC research.
Generally, you need to try to save at least 10% to 20% of the cost of the home you would like. For example, if I want to buy a home costing £200,000, then I’ll need to save at least £20,000 (10%).
Saving more than 10% will give you access to a wider range of cheaper mortgages available on the market. You can also estimate mortgage affordability based on your income.
As a first-time homebuyer, the most important thing to bear in mind is whether you can afford to take this step. It’s like a reminder for everyone. Calculate your monthly payments to reach your dream house. Saving for your future, especially for your dream house is really important!
Most first-time buyers will need to take out a mortgage to cover most of the cost of the property, but a minimum deposit of 10% is typically required in order to obtain a mortgage.
There are other costs in addition to paying for the property, which may be easily forgotten. You will need to use a solicitor and budget for their fees and it would help to keep at least a few hundred pounds aside if you have furniture to move to pay a removal firm or simply hire a van.
Local market indicators
As frustrating as it may be, one of the largest factors to consider when buying a house is something you have no control over in the local market. Thus, long before you actually put an offer on a home, you should be monitoring the condition of the market in the area where you will be buying.
Pay special attention to the length of time that most homes in your price range stay on the market and if there are any big shifts in the asking price. Partnering with any realtor can help you understand these points.
You might be able to guess what your house budget is based on your finances and credit score, but speaking with a lender will help you determine a specific number.
Why do you need a lender? The first reason to talk to lenders is that they’ll give you the types of mortgages you may be able to qualify for. Additionally, you can ask as many questions as you’d like about possible terms, interest rates, and specific requirements for credit scores. Nice, isn’t it?
Second, you’ll be able to ask your chosen mortgage lender for a mortgage pre-approval. This isn’t a guarantee that you’ll get a loan, though it’s simply a statement that you’re financially qualified to receive one, based on a preliminary examination of your finances.
As part of the mortgage application process you’ll need to provide your lender with some financial information, including your income, debts, and assets. If you’re a first-time buyer, you may be eligible for the Help to Buy Equity Loan, which gives many homebuyers an option of buying with as little as a 5% deposit! So convenient!
Hire a real estate agent
I’ve seen that some first-time buyers make the mistake of not hiring their realtor and working with the seller’s agent. This is a BIG no-no.
Nothing’s wrong with researching online real estate sites or going to open houses on your own. But an experienced agent can be your best ally when you get serious, particularly if this is your first home and you haven’t been through the process before. It can be scary when you don’t know anything, right?
Speak with some agents or get recommendations from friends before making your choice. The right agent can make all the difference between a smooth search and buying experience, or a frustrating one.
List your home features you want
Once you know how much house you can actually afford, you can actually begin your search for a home in your area of choice.
Although you probably won’t be able to find a listing that fulfills every item on your wishlist, it’s a good idea to keep your priorities top of mind to ensure you know what to look for when buying a house.
Write them down and make sure to revisit them as you begin looking at homes. It’s always a good idea to make a list of important features you want in your new home. Talk to friends and family members who own a home and ask them what features they wish they had or didn’t have.
The number of bedrooms, and bathrooms? Do you want a home office? Large yard for your dogs? I want my dream house to have everything I need. The case is you will most likely not find a house that has everything on your list. So you should focus on which features are a must and preferred.
Make an offer and negotiate
You’ve found your dream house and decided to buy it?
With the help of your real estate agent, you will determine a fair price to offer the homeowners in which you are interested.
You should always defer to the opinion of your agent, as s/he will know a lot more about the housing market and the rules that apply to home offers.
S/he will once again be your best friend and can walk you through how to make an offer on a house. S/he may even be able to find out how hot interest has been in the property and whether there are other offers pending or in the works. That will help you decide how aggressively to bid or whether a lowball offer might be accepted.
Gathering all documents
When buying a house, you’ll need to submit financial documentation to your lender – I bet a lot of financial documentation. If you haven’t already done it by the time you begin house hunting, you need to get started now. The sooner you start gathering it, the better.
Home inspection & secure a loan
Yaaay! The one that I’ve been waiting for! A home inspection!
Mortgage companies do not need home inspections to close on a house. But, you should never skip the home inspection. Even on brand-new homes, you should get an independent home inspector to ensure no potential problems.
A home inspection will confirm whether the homeowners were honest with you in their listing and reveal any issues that might have gone unnoticed. After the inspection and the appraisal of the property, you can secure your loan with a bank or lender.
If there are any issues, you can have the seller repair them before you close or have them reduce the price so you can get them repaired on your own. Skipping the inspection could cost you thousands of repairs down the road. I’m pretty sure I don’t want it to happen after closing my new home.
Remember, no purchase should be completed without having a house inspection performed, and no contract should be signed without a contingency clause saying the house must pass inspection.
Closing your new home
You’ve finally made it!
Purchase agreements are done, inspections are complete, contingencies have been met and financing is in place. All that’s left is signing mountains of documents and receiving the keys to your new house.
Here, you’ll experience a mixture of nervousness, anticipation, and boredom at the same time. Since you’re making a huge commitment, excited about taking possession of your new home and sitting there for an hour signing document after document.
But it’s not difficult, and at least after a few days, you’ll realize that the craziness and stress were all worth it.
Once you have signed all the documents, paid all of the necessary fees, and officially closed your house purchase, you can move into your brand-new home.
When you feel like you’re ready to become a homeowner, it is important to pinpoint the most important things to consider when buying a house.
I know as a first-time buyer you need to consider several factors, such as your finances, mortgage rates, local market, get pre-approved, and never skip the home inspection.
By giving some of these questions careful consideration, you’ll be sure to have awareness and mindfulness as you dive into the realm of homeownership. Hope you’re having a good time and a smooth process of buying your dream house!
Let me know below what else should I add to the list of considerations when buying a house. Have you experienced the feeling of nervousness and anticipation when buying your first home?