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The 7 Most Common Mistakes New Home Buyers Make

Buying your first home is one of the most exciting things in life, but don’t let the emotion of the moment send you into a fit of bad decisions.

The process goes much better when you pause, take a breath, and tend to all the minor matters that can derail a home purchase transaction.

Here are seven things a homeowner-to-be might overlook in the rush to sign on the dotted line.

Get a Building Inspection

It’s a good thing when a house looks well built on the inside and out, but don’t let a first glance be the final word.

Not every potential problem is visible to the layperson’s eye. Don’t trust yourself to notice rising damp, structural damage, or the sneaky hidden presence of pests.

A professional inspection is a small price to pay when compared to the thousands of dollars you might eventually fork over to fix a problem after you’ve bought the house.

Statement of Adjustments

As it gets nearer to settlement time, you should hear from your conveyancer or solicitor in regard to what is called the Statement of Adjustments. If there are any additional fees or charges related to the house, they should be listed in the document.

Common charges are taxes, corporation fees, and rate adjustments. Since the deal can’t conclude until these are paid, get an estimate as to what the total might be and figure it into the money you’ll need to close the deal.

Conveyancing

The process of legally transferring the title of the property from seller to buyer is tedious and fraught with opportunities to make a mistake. In short, you don’t want to try this on your own unless you are a professional conveyancer.

Sales Contract

When it comes time to making an offer on a house, you need a sales contract that has been read and approved by a qualified conveyancer or solicitor.

Keep a copy of the contract for your own records. This is likely to be the largest purchase in your life. In order to avoid confusion and misunderstanding, create a paper trail at every step along the way.

Lender’s Mortgage Insurance

No reputable lender will put their money on the line in the form of a loan unless you take out Lender’s Mortgage Insurance (LMI) policy.

The standard amount insured is equal to 80 percent of the home’s value.

LMI coverage insures that the lender will not be left holding the bag in the case of a foreclosure or default by the owner. One way around to reduce or remove the LMI requirement is to put up a larger deposit.

Stamp Duty

Australia levies a stamp duty on most property purchases within the country. Variables that determine the amount of the tax are purchase price and the particular state or territory where the property is located.

The stamp duty is required to be paid at settlement and is another cost of buying a house that needs to be calculated before the deal is signed. Ask your lender for a cost estimate or use an online calculator.

The Pre-Approval Letter

Last but certainly not least is the pre-approval letter from your lender.

You remembered to get one, right? This is a letter that states how much money you have been approved to borrow, and serves as an indication to agents and sellers that you are a serious buyer.

The pre-approval letter also lets you sit down and come up with a realistic budget when it comes time to calculate how much mortgage you can afford.

The bottom line is that inattention to detail in the first time home buying process can derail even the best-intentioned of buyers.

While your agent should help keep track of all you need to do, don’t assume that he or she is infallible.

Create your own list and check it off one by one. Before long, you’ll be turning the key to unlock your first house.