It’s not always an easy process to buy a home. Many first-time homebuyers encounter obstacles, and it’s not unusual to run into flying monkeys and wicked witches along that yellow brick road to home ownership. The first step in home buying is to prepare for the obstacles.
An experienced real estate agent can help you to find the right home, determine how much to pay and negotiate the offer for you. Moreover, an agent can guide you every step of the way throughout the home buying process.
(Know the step and process before buying a house, click here to read Step by Step Guide For First-Time Homebuyer)
In today, we will discuss about there is 5 major obstacles that faced by every first-time homebuyers and we will give your some guides to solved each obstacle.
Home Buying Obstacle #1: Finding a Down Payment
Generally, every homebuyer have to pay a 10% of property purchase price for down payment. If your savings able to cover at least 20% of property purchase price, you then can proceed with the house purchase. The reasons we said that you need to prepare at least 20% of property purchase price are in case the bank not offer your the loan up to 90% of the property purchase price and have enough money to cover all the costs during buying a property such as stamp duties, legal fees, processing fee and etc.
While, if your savings don’t really enough to pay for down payment of a property, you should then keeping up to save as many as money as you can till your savings able to cover at least 20% of property purchase price.
Home Buying Obstacle #2: Having a very low credit score
No matter you are applying the loan to buy car, buy house or applying a personal loan, you shall not ignore your personal credit score and even underestimate its power. This is because if you having a very low/ bad credit score, your loan application is most likely to be rejected by the bank officer for sure or you can’t get the best interest rate as others who have a great credit score.
Is is advisable to check your credit score before the bank officer do, and know your credit score in advance before applying for housing loan. Having A Very Low Credit Score? No Fret, Here Are 5 Tips To Help You Out!
(Click here to read How To Check Your Credit Score?)
Home Buying Obstacle #3: Your Debts Servicing Ratio
Before purchasing any properties, this is important to find out how much you can borrow from bank which based on your Debts Servicing Ratio (generally known as DSR). Through your personal DSR, the bank will get to know how many debts that you are serving currently. The bank will determine whether approve or reject your loan application after accessed your DSR.
If you’re servicing too many debts currently (e.g. credit card debts, personal loan, car loan and etc.) the bank is most likely to reject your loan application as they won’t take this risks on you.
(Click here to read Find Out How Much You Can Borrow Based On Your DSR)
Home Buying Obstacle #4: Choosing a property
If you already knew where to live in and form a family, you should proceed with house hunting and find out its prices and compare with the similar properties in the area.
While if you’re working out of state and prefer to live in your own home rather than rent the house, you should then put a little effort to search for the location of the house that suits to you and won’t regret after bought.
(Click here to read Tips for Finding the Right Location for Your First Home)
Home Buying Obstacle #5: Affordability
To buy any property that you prefer, the first thing that you should consider is whether you can afford it or not. Although your savings can cover the down payment as well as all costs during buying a house, but are you able to afford this property for long-term?
Firstly, you will need to find out whether the loan repayment of this property has exceeding one third of your monthly net income. If it is, do look for other property with lower price and negotiate with the bank officer whether can offer your the lower interest rate or extend the loan tenure.
(Click here to read How To Define Whether You Can Afford For A House)