First Time Home Buyer Guide in 2022

Are you making a final decision to purchase your first home? Congratulations as you've come to the proper site for advice.

The process of buying a home may be both thrilling and overwhelming for first-time home buyers like you. Since when purchasing a home there are numerous factors to take into account, from location and price to locating the ideal property that meets your needs. But, you need not worry!

You are in the right place because this guide will help you to be familiar with the home-buying process and the costs involved in buying your first home.

Costs Involved in your First Home Purchase

Having a budget in mind is crucial when planning to buy your first house. Because this will enable you to establish the size of the home you can afford and the mortgage payments you are OK with. Having some money set up for a down payment is also advisable because it can lower your loan's interest rate. 

There are usually two types of costs: upfront costs when securing a loan, and the ongoing costs once you bought a house. We provided the lists of the costs involved in buying your first home so you can set the right budget:

Upfront Costs:

1. Conveyancing & Legal Fees. This fee involved the ones who do the legal paperwork when you buy a house, you hire a professional conveyancer to help you process the paperwork and give you legal advice to property transactions. 
2. Stamp duty. The charge is applied by the state or territory governments, so it depends on the state where you chose to buy your first home. Although some states don’t require first-home buyers to buy stamp duty, in other states, stamp duty can cost tens of thousands of dollars that is why most homebuyers complained about this cost when they are purchasing a house. 
3. Lenders Mortgage Insurance or LMI. This is mostly charged by the lender when the homebuyer is borrowing more than 80% of the value of the property. Lenders Mortgage Insurance helps to protect the lender from borrowers that might stop paying the loan. 
4. Pest & Building Inspections. Most homebuyers skip inspections because of the costs, however, getting this kind of inspection is strongly advised since it will help you to know if there’s any problem in the house that may bring costly repairs later on. 
5. Home Loan Fees. You may be charged with a home loan by your mortgage lender, and this depends on the mortgage lender you are working with. These are the common types of home loan fees they may charge upon you:
   • Rate lock fee
   • Document preparation fee
   • Security guarantee fee
   • Loan establishment fee
   • Valuation fee

Keep in mind that the interest rate matters when you are finding your first home, so shop around and compare home loan rates so you can find the best rate. 

Ongoing Costs:

1. Repairs and Maintenance. As a homeowner, you need to have the budget for repairs and maintenance. If you want to have a well-maintained home you need to regularly check if there’s any problem that needed to be fixed to prevent any further heavy repairs, and also, to help you get ready for the change of seasons.
2. Strata or Body Corporate Fees. Once you purchase a house, you need to pay for the strata or body corporate fees. This applies if you have any shared areas around your property.
3. Utilities. Naturally, you need to have a budget prepared for the monthly utility bills you need to pay. 
4. Monthly Repayment. Once you settle into your new home, you need to continuously pay your monthly repayments. 

New Home Vs. Existing Home

There are many factors you need to consider when purchasing your first home. One of the biggest decisions is whether to buy a new home or an existing home. Both choices have their own pros and so it's important to weigh your options carefully before making a decision.

New homes are usually more expensive than existing homes, but they also come with a number of benefits. New homes are typically built with the latest materials and construction techniques, which can make them more energy-efficient and durable than older homes. They also usually come with insurance from the builder, so you'll have peace of mind knowing that your home is covered if anything goes wrong.

But, compared to new construction, existing homes frequently have more charm and character. They might also have established gardens and mature landscaping, as well as being in more enticing neighbourhoods. If you're handy, you might also be able to remodel an existing house to your preferences and style for less money than purchasing a brand-new house.

The choice between purchasing a new or used home ultimately boils down to personal preference. Whatever option you select, be sure to consult with a trustworthy mortgage broker who can assist you in finding the ideal home for your requirements.

Why Should You Hire a Broker?

There are a number of reasons to hire a broker when buying your first home. A broker is an intermediary who negotiates home loan terms with banks or other lenders. They can also provide valuable insights into the local market, which can be helpful when you are finding the right house for you.

Overall, hiring a broker is a smart move when you buy your first home. With their experience and knowledge, they can help you avoid common mistakes and guide you to make the right decision for your future.

What Insurance do you need when you buy your First Home?

Home insurance protects your home and possessions in the event of damage or theft, it also provides liability coverage in the event that someone is injured on your property. Without home insurance, you would be responsible for all of the costs associated with repairing or replacing your home and belongings. These are the insurances that you can get when you buy your first home:

1. Home Insurance. It covers the property and the items that are permanently attached to the property. 
2. Content Insurance. This is the opposite of home insurance since it covers items that are not permanently fixed to the walls or floors like television or tables.
3. Life Insurance. This type of insurance helps to provide a lump sum within the mortgage term to your family when you die. 
4. Lenders Mortgage Insurance. This insurance protects the lender when you are unable to pay the loan.

Conclusion

The process of buying your first home can be an exciting and daunting time since there are a lot of things that you need to process, plus consider in the long run. But with the help of our guide, you can make the process as smooth and stress-free as possible.