Purchasing a house is no easy feat. Needless to say, it will likely be one of your most challenging financial decisions. Whether you are a first-time home buyer or an experienced real estate investor, you need to be mindful of a few important factors before deciding to buy residential property.

In addition to that, you should invest in property management services in order to get expert advice on this crucial financial matter.

Here is what you need to know before buying a home in 2020.

Are You Willing to Settle Down?

If you are willing to settle down in the area where you are residing right now, it might make sense to buy property there. But, before you make a decision, it is important to remember a few things. For instance, you should be certain that you like your area enough to remain there in the future. You should also be sure about your job security and progress.

If you have kids, you may be more likely to settle down. Since banks are aware of the cost of raising kids, you may face a substantial reduction in the amount that you can borrow if you have several kids.

Know Your Finances

Before applying for a mortgage loan, you need to fully assess your financial condition because a mortgage is a tremendous financial undertaking. Discuss your situation with your financial adviser to find out what is right for you. The stronger your finances, the more feasible it is to get a mortgage loan for buying a house.

You may need to look into your debt and clear them before applying for a mortgage loan. Find out your credit score as well and make sure that your credit score is excellent before applying for a mortgage loan. If it is not, you may have to work on your score for a few months but in the long term, the effort is certainly worthwhile, in fact, critical. That is because the mortgage terms and conditions, including the interest rate will depend heavily on your score.

A small change in your credit score might give you a lower interest rate. This is critical considering that you will pay off the loan in around three decades. Even small improvements in the terms and conditions to your mortgage are welcome due to the time duration involved. Therefore, you should definitely improve your credit score as far as possible to reap the rewards in the long run.

The Costs of Buying a Home

There are numerous costs involved in buying a home. Some of them are as follows:

Down Payment – to secure the mortgage, you will need to pay at least 10% of your property value as a down payment for the loan. To avoid the lender’s mortgage insurance, you will have to pay 20% of your home price upfront. While this does seem attractive, having enough cash for the 20% down payment is not an easy feat for most people.

Stamp Duty – its cost depends on your state and the value of your property.

Legal Fees – there will be plenty of paperwork and legalities involved since buying a home is a major transaction. You will have to pay for the legal work that comes with legal checks and conveyancing. The cost will be between one to three thousand dollars.

Fees – you will have to pay fees for settlements, applications and valuations. The cost of a mortgage application can go up to six hundred dollars, depending on your lender.

Inspection – you should be willing to pay for the home inspection as well as pest inspection to ensure that you do not face unexpected problems that may prove to be costly. The cost of such inspections will be a few hundred dollars, but you should not overlook it as it can potentially save you enormous problems and expenses in the future.

Keep an eye on signs of property damage, such as mold and water damage, which can easily go unnoticed. Hence, a complete inspection by professionals is necessary to ensure that you don’t miss anything.

You should also factor in mortgage protection insurance, home insurance, strata fees, council rates, moving costs and utilities, apart from the monthly mortgage payments. Last but not least, there is the cost of repairs and maintenance that you may incur by living in your property.

Mortgage

Do your research to find a lender that provides the best interest rates as well as terms and conditions on the mortgage loan. If you have a good credit score and enough money for the 20% down payment, you will have brighter prospects for a lower interest.

Before committing yourself to a mortgage loan, make sure to go through a list of the best mortgage lenders before finalizing your decision. Once you select a lender, read the fine print and make sure that you understand all terms and conditions.

Take a close look at the interest rate, the duration of the loan and other conditions that you must fulfill.

You might have an option for selecting a fixed or variable interest rate. There are pros and cons to both types of interest. With a fixed interest rate, you know exactly how much you will be paying. There is no uncertainty involved.

Variable interest rates, on the other hand, may decline and potentially save you plenty of money. However, they can also go the other way round so you will end up paying more. Your financial adviser will be able to recommend the best choice for you.

Pre-approval

This is also known as approval in principle and conditional approval. The advantage of pre-approval is that you are aware of how much you can possibly borrow and thus your available price range. You can search for property based on this information.

You will have to provide the lender with details about your investments, income, savings and credit history. Based on this information, your lender can show you how much you are eligible to borrow. With this in mind, you can find the right house for your available budget.

To buy residential property, invest in property management services to make the best possible choice without regretting anything.