Professionals Real Estate 
Making the decision to purchase your first home is just the first step, now you have many more ahead of you.
How much money do you have and need?
The decision to buy should be based on the fact that you have been saving up for this new venture. Ideally you will want to have 20% of the cost of the home as your down payment. This can sound a little overwhelming, but it is not a figure that is written in stone. If you feel that you are in a financial position where you can carry the costs of owning your own home, then pursue it. You can start approaching the banks to see what they are willing to finance for you. Some of these lending institutions will give you up to 95% of what the property is worth, which means you only need to raise the other 5%, to have your new home financing in place.
How much money do you qualify for?
Don’t under estimate as to how the bank will view you as a lender. They will need to determine your borrowing capacity, but you can figure out for yourself approximately what this will be so there will be on big surprises or disappointments when you approach the lender. There are borrowing calculators that are online that you can utilize. The proper methods for arriving at what your borrowing capacity is by determining your income as well as your debt ratio. In order to enhance your credit standing you can pay off some of your outstanding debts, and keeping yourself in good standing with your existing creditors.
Pre-Qualifying:
To really allow you to know what you are going to qualify for financially for your first time home buying you can seek out pre-approval financing. How it works is that a review of your income and debts will be conducted. Your credit history is checked out, and it will be determined if you require mortgage insurance. Then a formal pre-approval is prepared that would be valid for three to six months provided there are no changes in your financial status. This means you can now starting the exciting adventure of buying your first time home knowing what your purchase limits are based on your pre-approval.
Finding a sweet deal:
Not all banks are the same, but each of them want your business. Some of these lending institutions will offer you a sweet deal that is dubbed as “honeymoon interest rates”. They may also have options available that will allow your family to participate in your first home purchase. It could be they will accept a family pledge. What this means is that your family member will pledge a portion of the equity in their home towards your down payment. If this is not an option then co-signing the loan may be. In this case the family member is acting as a guarantor of the loan for your house. They would be using their property as the security, and it usually amounts to around 20%.
Determine if you can take advantage of FHOG:
This is a government program called the First Home Owners Grant (FHOG). It varies according to each state in respect to the grant and stamp duty concessions. You may need some help in determining if you are eligible.
Factor in the LMI:
LMI is lenders mortgage insurance. This is insurance for the bank when they have loaned you more than 80% of the value of the property. It insures that should you not be able to pay your mortgage that they are covered for the money. It is a one-off fee. How much it amounts to depends on how much you were initially able to put down on your deposit. This is an important reason for trying to raise as much money as you can for your first time home buyer deposit.
Making the home buying offer:
Once you have found that special first home that is perfect for you, then you will want to present the offer. The lender will place a value on your property, review and accept your application, and offer a final credit assessment. Once all of this has been done, you will then need to give your deposit. Upon approval confirmation the final documents will be ready for you to have them reviewed by your legal counsel, and then to be signed by you.
The final step is the most exciting one which is the settle in settlement. This is where the actual exchange of money and property titles take place. Once completed the keys to your new home are formally handed over to you and you have now become the new owner of your first time buyers home.
Need more advice on becoming a first home buyer? Talk to your local Professionals Real Estate office today for great advice to help you live the Aussie dream.
