4 Tips To Buy A Home Faster
Congratulations! You’re thinking about taking the first step in what will be one of the most significant milestones in your life – home ownership.
However, the process of buying a home can be intimidating, with a plethora of financial, legal and logistical considerations to take into account.
To make your journey as smooth and stress-free as possible, preparation is key.
In this blog, we’ll provide a roadmap to help you become ready to purchase a home faster.
Lets dive into it!
I. Improve Your Credit Score
Your credit score is a critical factor in the mortgage approval process. A high credit score tells lenders that you’re a responsible borrower, making you a lower risk and more likely to be approved for a loan.
Whether you currently have a high credit score, have a very low credit score, or are somewhere in between, it is critical to do your best to achieve a reasonable score so that this doesn't become a roadblock to home ownership.
Here are a few tips to improve your credit score:
- Check your credit report regularly and correct any errors.
- Pay your bills and rent on time. Late payments can significantly impact your credit score.
- Keep your credit card balances low. High balances can make it look like you’re over-extended.
- Limit new credit applications. Each time you apply for credit, it leaves a “footprint” on your credit report, which can impact your score in a negative way.
II. Increase Your Savings
Having a substantial down payment not only makes it easier to get approved for a mortgage but can also lower your monthly payments.
This also happens to be one of the most challenging aspects of the journey toward homeownership for most people.
In Australia, the struggle to save for a down payment on a mortgage is a common issue.
According to a study by commissioned by lenders mortgage insurance company, Helia, and completed by CoreData, more than half the Australians (60%) surveyed said that saving for a down payment was their biggest barrier to homeownership.
Another study by the Reserve Bank of Australia found that the average time it takes for a first-time homebuyer to save a 20% down payment has increased from 4.5 years in the 1990s to over 8 years in recent years.
Over the last 40 years we have also seen property prices grow disproportionately to income which further exacerbates the problem.
These statistics highlight the growing challenge of saving for a down payment in Australia and the need for prospective homebuyers to plan and prepare carefully.
Here are some tips to help you increase your savings:
- Create a budget and stick to it. Look for areas where you can reduce your expenses and put the savings into your down payment fund.
- Consider taking on a side hustle, web3 opportunities, or asking for a raise to increase your income.
- Automate your savings. Set up an automatic transfer from your account which income lands and have a percentage transferred into a savings account with no debit card attached.
- Track your spending. Track your spending for 30 days and assess areas where you’re spending money that can easily be stopped.
III. Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a crucial step in the home buying process.
This involves a lender reviewing your financial information and credit history to determine how much you can afford to borrow.
The benefits of getting pre-approved are numerous:
- You’ll know exactly how much home you can afford, taking the guesswork out of the process.
- It gives you bargaining power when negotiating with sellers. Knowing that you have the financing in place can make you a more attractive buyer.
- It streamlines the home buying process, making it faster and easier.
IV. Seek Professional Advice
Buying a home is a complex process, and it’s essential to seek advice from professionals.
Consider working with a:
- Real estate agent,
- Financial advisor (We recommend our partner National Investment Advisory for expert guidance), or
- Mortgage broker.
These individuals can help guide you through the process and provide valuable advice on how to become ready to purchase a home faster.
Becoming ready to purchase a home requires planning, preparation, and a little bit of patience.
Improving your credit score, increasing your savings, getting pre-approved for a mortgage, and seeking professional advice are all key steps in the journey.
With a little bit of effort, you’ll be well on your way to achieving your dream of home ownership.