First-time homebuyer's guide - what you need to know

Owning a home is a significant milestone that many aspire to achieve. The journey may seem daunting for first-time homebuyers, but with the proper knowledge, preparation, and guidance, it can be a rewarding and exciting experience. 

In this article, we'll break down the home-buying process and its benefits, covering essential aspects like financing, things to consider on your home-buying journey, and helpful tips.

Why consider buying a home?

For most, it makes it easier to build up equity. You can witness the worth of your home grow as you take on more and more responsibility for it with each bond payment. Furthermore, becoming a homeowner brings a feeling of steadiness and safety you won't get when renting. In the long run, it becomes more than just a house; it is an investment in your future.

What you need to know about buying a home

Here are some key insights into the home-buying experience, including house hunting and navigating finances.

1. Check your credit score

Your credit score plays a significant role in the home loan application process. It measures your creditworthiness and indicates your ability to repay debts. When applying for a home loan, the lender will pull your credit score from credit bureaus. 

A credit score above 600 is generally considered good, while a score above 670 is excellent. The higher your credit score, the better your chances of getting loan approval.

2. Make an offer with caution

When you discover the home you love, express your interest by signing the Offer to Purchase. To ensure you get all the crucial details, looking for guidance from an estate agent or attorney is a good idea. They can review the document with you, ensuring everything is in order and that you fully understand the terms before committing.

3. Understand the 72-hour clause

In some cases, the Offer to Purchase may have a 72-hour clause. It means that even after accepting your offer, the seller can continue trying to find other potential buyers. The original agreement remains in place if a better offer comes in during this 72-hour period. 

However, as the initial buyer, you have a limited time (72 hours) to meet the conditions specified in the offer. If you can't fulfil these conditions, the agreement becomes invalid, and the seller is free to consider the new offer.

4. Deposit consideration

A 10% to 20% down payment is expected when buying a property. Both the loan's acceptance and the interest rate are affected by this sum. Some, especially first-time buyers, choose a 100% home loan, avoiding needing a deposit, which can be helpful.

6. Home loan application

Applying for a home loan is a critical step in achieving homeownership. It involves gathering necessary documents, such as identification, proof of income, and tax returns, and submitting them to the lender. The lender then evaluates the application and decides whether to approve or deny the loan.

6. Legal procedures

Bond registration is one of the primary legal procedures that follow home loan approval. In this process, the bank appoints a bond attorney responsible for registering the bond with the Deeds Office. The bond attorney ensures that the bond is registered correctly and all the necessary documentation is provided.

The seller will appoint a conveyancing attorney as part of the property transfer process and is responsible for finalising the transfer of ownership and ensuring that all legal requirements are met.

Other legal steps:

Pay associated fees, such as transfer duty for properties over R1,000,000.
Use the Transfer Cost Calculator to determine costs.
The bond registration and transfer process will take around three months.

Tips on how to navigate home-buying

• Check your finances: Begin by looking at your finances. Check your credit score and start saving for a down payment. 
• Make sure you budget: Make a practical budget that includes the house cost and ongoing expenses. It helps set financial boundaries.
• Get bond approval: Get pre-approval for a bond. It shows sellers you're ready to buy and helps you understand how much you can borrow.
• Work with a real estate agent: Work with a real estate agent to find a home you like in your preferred area.
• Check the property: Look closely at the property for any potential problems. 

Are you looking to kickstart your homeownership journey? With Upton Properties, you could find your dream home. Whether it's a starter house or a spacious family residence, we offer you a wide array of options. Browse our property listings or get in touch with us.