home buying guide
Now is the time to find and purchase a home that will meet your needs for years to come. This could be significant and stressful at the same time. However, at DSRE we strive to make it our goal that these transitions go as smoothly as possible.
▪Ask yourself these questions when considering a new home:
▪Where would you like to live? Would you like to be close to schools, shopping or work?
▪What kind of features do you need in your new home? Are you looking for a particular style? How many bedrooms and bathrooms do you need?
▪How much can you afford? Have you consulted with a Realtor or mortgage lender to determine the amount of mortgage you would qualify for?
Getting organised is very helpful to your home buying process.
Here are a few tips:
▪Obtain your credit report and make sure the information is accurate. If there are any errors, please correct them immediately. The accuracy of your credit is one of the factors that determine your mortgage approval.
▪There are plenty of real estate advertisements in the local newspaper and on web sites. This will give you an idea of the types of homes that are on the market and what they cost.
▪Get a list of open houses and visit them on their respective dates. There’s absolutely no cost to look, and viewing different homes may give you an idea as to what you’re looking for but haven't considered.
▪Start saving. You'll need to have extra cash on hand for a down payment and closing costs.
▪Don’t acquire any more debt than you may currently have. Pay off your credit cards and don't apply for any new ones. Try not to make any major purchases on credit. You can always buy the furniture or that new car later.
▪Contact a DSRE Sales Consultant and they will be able to put you in contact with professionals that have the experience, track record and expertise to help you determine how much you can afford and the DSRE consultant can provide you with additional information on homes that may interest you. The consultant will also help you complete all of the necessary forms when it comes time to make an offer.
What mortgage can I afford?
First, you need to determine the monthly amount you feel you can repay comfortably. What a lender thinks you can qualify for can be higher or lower than your own calculation, and you need to feel that it is an ongoing payment you can definitely make. A Lender will qualify a borrower based on three factors: Credit, Income and Assets.
Income: A household (could be more than one borrower), should spend no more than 28% to33% of its before-tax income (gross income) on household expenses. Household expenses include mortgage principal and interest, insurance, real estate costs such as council rates, land tax and strata fees, and mortgage insurance. At the same time housing expenses and other long-term debts combined generally should not be more than 36% to 41% of gross income.
Long-term debt includes car loans, credit card payments, student loans or medical bills. The stability of the income also plays a vital role.
Credit History: Lenders look into how a borrower has handled debt repayment in the past. A credit history is usually used to indicate the likelihood of you making payments on time. A good credit rating indicates a borrower is more likely to make payments on time.
Assets: Some loan products require a down-payment. Borrowers are asked to verify their assets to fulfil that requirement. Larger cash assets also show a borrower’s ability to save.
Qualification guidelines are flexible and will vary depending on the loan program that suits your needs. If one of these factors looks weak but the other two are strong, exceptions can be made. For example, if a borrower’s credit history is lower than the minimum required, but has a reasonable and stable income and substantial assets, than an exception may be made to accept the lower credit history credentials.