People fear what they don’t understand. A good example is the purchase of a home. Most people know very little about the home buying process. Between finding the right house, making sure it won’t fall apart the day after you buy, and finding the best financing, it’s no wonder so many people are afraid to buy homes.
Purchasing a home is one of the most important financial decisions we’ll ever make. For a first homebuyer, the decision to purchase can be daunting. It represents a major step since you and your family will potentially be assuming your largest responsibility. As with any major decision, it’s important that everyone—especially first homebuyers—take full advantage of the information that’s available to more clearly understand the home buying process.
To prepare, do some research before beginning the search for your dream home. Here are 7 steps to get started:
STEP 1: Before you start your house search, think carefully about what it will be like to be a homeowner. For most people, homeownership can be one of the most significant financial turning points in their lives. The advantages (do as you please, pride of ownership, financial investment) far outweigh any drawbacks.
STEP 2: Your credit history is one of the first things a Lender will look at in making a decision on your loan. Request a copy of your credit report from Veda Advantage and review it carefully to be sure all the information is correct. If you find discrepancies, work with them to resolve, it’s important.
STEP 3: Saving for a deposit can be one of the biggest barriers to homeownership. Mortgage lenders recognize this dilemma, and some now offer loans with deposits as low as 10%.
STEP 4: Keep in mind that most real estate agents represent the seller, not the buyer. But it’s possible to work with a RE Agent as they are under an obligation to disclose any known defects to the property and must give an REAA guide to buying. They are normally very helpful when it comes to local recommendations, especially useful if you are form out of town.
STEP 5: Before you begin working with an Agent, find a mortgage broker you can trust and ask to be pre-approved for a mortgage.
A pre-approval letter, involves verification of the information provided. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your deposit and other aspects of your financial circumstances. Granted, a pre-approval can be time-consuming (and possibly stressful!) but the additional due diligence is exactly why a pre-approval is worth what it is and then you simply add a property to the mix.
Lenders will provide this service free of charge. A Pre-approval will let you know exactly how much you can spend on a home BEFORE you start your search. A pre-approval in hand also makes you a more attractive buyer when you’re ready to make an offer on a home. Home sellers are more likely to accept an offer from a buyer who can demonstrate the ability to secure financing.
STEP 6: Many mortgage lenders, Brokers and even Agents offer homebuyer education to prepare you for homeownership. Some of the topics covered are how to apply for a loan, finding the right Agent, making an offer on a home, and the advantages and responsibilities of homeownership. Sometimes you just have to ask.
STEP 7: A Mortgage Broker vs. Bank. Mortgage Brokers have many different banks and mortgage lenders that they “broker” their loans to, similar to stockbrokers or insurance agents. Since Mortgage Brokers do business with lots of financial institutions throughout New Zealand, they can:
- Send the loan to many different underwriters
- Shop for the best rates and cashbacks
- Save you money by not charging loan origination fees
- Seek alternatives if the Bank says ‘No’
So, what’s in it for you?
Obviously, there are real advantages to getting yourself out of the “trap” of paying rent. Now that you’ve seen some of the steps involved in achieving that goal, what’s the best way to proceed?
Yes, you could wander out into the mortgage market on your own and start shopping, comparing and negotiating directly with Banks. Even if you’re working with a trusted real estate agent, you’re still pretty much on your own when it comes to financing since most Agents don’t fully understand mortgages.
Keep in mind that that once you’ve signed a purchase agreement, you have to apply for a mortgage almost immediately. Is a day or two long enough for you to make a decision all by yourself that could affect you and your family for the next 30 years?
Dealing directly with a financial institution can add even more stress. Most banks like to “cherry pick” the easy clients that fit into standard off-the-shelf mortgage products. If your needs are slightly different, you may be turned down or end up paying a higher rate, or even worse ‘forgotten’ in the long queue!
Why complicate and struggle through what should be one of life’s greatest pleasures? As your qualified Mortgage Broker, I’d be happy to help you realize your dreams of homeownership and take care of everything for you. By working with a true professional—someone who has specialised knowledge of home financing—you can get the best available mortgage and rate from a range of Lenders, and be confident you’ve made the right decision for today and the foreseeable future. The result: you’ll save thousands of dollars and take a big step toward future financial security!
At iLender we are committed to you. Although based just north of Auckland we cover the entire Country and also assist those overseas. Just tell us what you are looking to achieve and we’ll tell you the best way of attaining it. Don’t take our word for this! Type ‘ilender’ into Trademe and read some of the 170 odd reviews left by satisfied customers, more than any other Mortgage Broker in New Zealand. Contact us today on 0800 536337 or email to [email protected]
NOW YOU HAVE YOUR MORTGAGE HOW ARE YOU GOING TO PROTECT IT?
If there are people who are financially dependent on you, you need insurance to protect them.
If you die, your partner and children can be left in financial difficulty when your income is no longer coming in. Even the cost of a funeral is beyond some families’ financial means.
Insurance can help by allowing your family to pay off the mortgage, and cover extra costs like childcare. It can be very difficult to pay your living costs and other bills if you have to give up work through illness. ACC only covers you if you have an accident.
iLender has an inhouse insurance expert who can explain the options for cover and premiums and make recommendations. She can look at your financial commitments and family situation and suggest how much insurance cover you need and the best provider for your circumstances.