If you are buying a new property investment for the first time, then it can be super exciting and super stressful at the same time. The entire process of finding the perfect investment according to your needs and within a comfortable budget can often be quite daunting. Without proper market guidance and area specific knowledge you may find yourself in a situation of purchasing a property that might hurt your financial plans in the long run as you could potentially get involved in a high risk and costly investment.
Hiring a Residential Property Investment Consultant will give you the best opportunity to create maximum wealth creation in any given market.
Here are some important tips to consider before you get started.
1. Consult the investment consultants
In case, you are a first-time home buyer, then it is always suggested to hire a Residential Property Investment Consultant to get smart investment advice. You can check out the Melbourne Property investment consultants for top-notch services. Such investment programs will help you in eliminating any guesswork or last-minute finger-crossing and will also empower you to make an informed, affordable and strategic investment.
2. Pay off all the debt
Buying a house is expensive. When you own a house, you are accountable for all the maintenance and upkeep costs which are similar or cheaper than your current rent amount. Therefore, when you plan to buy a new house, make sure that you are as debt free as possible and have a backup of an emergency fund of three to six months of expenses in place.
3. Determine your budget
Before you fall in love with a beautiful home or investment property, check your monthly budget and savings to determine how much you can spend on your purchase. You also have to make room for other important expenses such as taxes, insurance, etc as these additional expenses are going to be no more than 25% of your monthly take-home pay. The property tax rates and insurance costs vary according to the location of the house. You need to check with your real estate agent and insurance company for estimates to calculate how much house you can afford.
4. Always save a down payment
If you are not financially ready to save for the total cost of the house, then you must save for a down payment of 20% or more. Then you won’t have to pay for private mortgage insurance, which further protects the mortgage company if you can’t make your payments and end up in foreclosure. The PMI generally costs 1 % of the total loan cost and it is added up with your monthly payment value. In case, the 20 % down payment seems to be out of your reach, then the first-time home buyer programs that offer small down payments may sound tempting. But it not suggested using these programs. All these options will cost you more in the long run. A 15-year fixed-rate conventional mortgage with a 20% down payment is recommended by many experts.
5. Get pre-approval for a loan
You should be confident about the saved cash to pay for closing costs and 20% of your home; therefore, you would be ready to handle the other 80% by talking to a mortgage lender. Before you start looking out for a new home, you should take the extra time to get a pre-approval letter. When you take the pre-approval, it reflects the sellers that you are a serious and smart buyer.