The Ultimate Guide: How to plan for buying a new home

The thought of buying a new home can be a little daunting, but it doesn’t have to be a scary or stressful experience. With time, care, and research, you can take control of the home-buying process.

To prepare yourself for the dream of owning your own home, here are 7 steps you’ll want to follow.

1. Determine What You Can Truly Afford

Well, there are no surprises here: your first step should be to determine your budget. After all, it is a major financial decision, so keeping a budget in mind will avoid you making any major spends outside of your budget.

Financial experts say that as a general rule of thumb, people should be looking at home prices that are two to three times your annual income. This helps ensure that you’re not taking on a larger mortgage commitment than you can afford.

You’ll also want to make sure you have enough savings left over to help pay for any home improvements, decorations, or maintenance costs that pop up. Being a homeowner often comes with surprises, so be prepared for unplanned costs.

2. Figure out Which Mortgage is Right For You

Now that you’ve got an idea of your numbers, it’s time to start shopping for a mortgage lender. Look out for lenders or banks that have good customer service and timely closings.

You’re likely to have a lot of questions regarding the whole home buying process, so choose a lender that answers all your questions satisfactorily.

Next is to decide which mortgage option makes most sense for you. The most common two: are fixed rate mortgage - in which your interest rate remains the steady for the duration of the loan, or an adjustable rate mortgage (ARM) in which your rate fluctuates to reflect market changes.

Check out Bankrate’s article to learn more about choosing between an adjustable-rate and fixed-rate mortgage.

3. Decide Which Features Are Must-Haves and Nice-to-Haves

Unfortunately, it’s the rare lucky person who will find the absolute perfect home within their budget. So before you start house hunting, it’s a good idea to brainstorm what you actually need in your new home, and what features are simply nice extras.

4. Start House Hunting, or Decide whether you need a Real Estate Agent

Now this is the fun part - house hunting! Browsing online on sites like TradeMe, is a good place to start. If you’re looking for houses away from the city, but without being too far from Auckland CBD, check out our listings.

It’s also time to decide if you’ll require a real estate agent. An agent can provide you with access to more home options than you’ll likely find yourself. Since buying a home can be an emotional process, agents do well in acting as mediator between you and the seller.

Whether you’d like to look yourself or with a real estate agent is completely up to you, and what you feel more comfortable with.

5. Put in an Offer

Fallen in love with a property that meets all your needs and maybe some of your wants - and it’s within your budget? Time to make that offer!

This part can get a little tricky. You don’t want to low-ball your offer and risk losing your home to another buyer - but you also don’t want to pay more than necessary.

So how do you figure out the best bid to make?

While there are no set rules, and it can vary in many different situations, here are a few things you should consider before making your offer.

  • Look at other home sales in your area. Is the house you want reasonably priced in comparison? Did other homes in the area sell for less or more than the asking price? If house in the area sold for an amount that’s similar to your seller’s list price, that’s a good indication you should be offering figures close to that.

  • Consider how long the home has been on the market and how incentivised the owner is to sell. For example, if the seller is living in a transition home while waiting to sell, you may have a better chance of getting the seller to accept a discounted offer.

6. Review the Contract and Submit Your Mortgage Application

The seller accepted your offer—congrats! But before you sign on the dotted line, you should make sure to review the contract thoroughly and understand every single clause.

Pay special attention to contingencies in the contract, which spell out situations where you can back out of the sale to help protect yourself in case something goes wrong.

7. Make it Official - Sign the Papers

Once you've signed the paperwork, you'll be handed the keys… and you'll officially become a homeowner!