Frequently Asked Questions on Owning a Home
Article by: Libese Igambi
Date: Friday, 14th June 2024
Welcome (almost) to the world of home ownership. The fact that you have gone through our website and all our listings up to this article says you are serious about buying a home. Buying a home is a big step; in fact, it’s many big steps. To the first-time home buyer, the process can seem long, complex, and confusing. I am looking to answer some of the questions that I have come across when engaging with homeowners.
- What is the difference between owning a home and renting one?
When you are renting a home, you just pay a fee(rent), often monthly, for a roof over your head. Of course, renting has its benefits such as,
- Flexibility – There’s nothing as liberating as knowing that you can just park and move (or on one months’ notice to the landlord) depending on the terms of your lease agreement. When you own a home, you need either to find a buyer first or get a tenant before moving, which may take up most of your time.
- Low maintenance -When it comes to maintenance it’s the landlord’s responsibility.
- Low move in costs -All you need when moving is a security deposit and rent as compared to buying where you need a minimum of 10% value of the property as a deposit.
When you are buying a home, you become the owner of the roof and everything beneath it. This has its benefits such as,
- Equity building – it’s frustrating to pay good money each month and not get anything in return than the right to live under someone else’s roof. When you own a home each mortgage payment builds up your equity in the house.
- Tax breaks. – According to KRA anyone who onboards a mortgage will be entitled to an interest deduction of up to a maximum of KShs 300,000/= per annum of interest paid to the approved and registered financial institutions.
- Potential for appreciation. – Land and buildings, unlike most other assets appreciate with time. When investing in properties you should seek advice from a real estate expert on properties that can appreciate quickly.
- Sense of pride and security – You don’t have to worry about your landlord raising the rent or kicking you out with no notice. When you own your own home, you have total control over your living situation. It’s a place where you can feel safe and secure.
- How do I know if I’m ready to buy a home?
There are very many factors one must consider knowing if they are ready to start their home ownership journey. These are some of them:
- Financial stability- before deciding to purchase a home one must have a steady income, enough savings to pay down payments and closing costs or have an emergency fund that could cover you for 3 to 6 months.
- Good credit- In case you want to purchase a home through mortgage, you have to have a good credit score and have good credit history. This really helps during prequalification and interests charged.
- Affordability- You must review your monthly budget and must be comfortable enough to accommodate your mortgage payments, insurance, maintenance, and other costs associated with home ownership.
- Market conditions- It is advisable to consult a real estate expert and get information on market conditions such as mortgage rates and local market conditions to know if it is a buyers’ market or sellers’ market.
- What are the costs involved in owning a home?
As a first-time home buyer there is a lot of excitement that comes with finding the perfect home that fits your lifestyle. However, you should always prepare yourself financially. Spending money does not end once you make a down payment on the house. Other than the full price of the house there are costs such as,
- Inspection costs- If you are buying an old house you have to get a construction expert to help with snagging any possible faults.
- Stamp duty fees – this is basically a tax applied on property documents when you are buying a house. In Kenya the ministry of lands determines what the stamp duty rates are, the Kenya Revenue Authority also performs the same function. The rate is usually 2% in rural areas and 4% in urban areas.
- Mortgage application fees- once you get a loan, you are charged an application fee which is usually nonrefundable even if the mortgage doesn’t go through. This often ranges from 1% to 2% of the loan amount.
- Legal and conveyancing fees – Legal fees are paid to the developer’s lawyer. Some developers might however waive this. You would also rather budget for a conveyancer who will help you understand what you need to pay for and avoid getting conned or scammed.
There are many other costs which include moving costs, advanced service charge utility costs and maintenance. Once you plan, buying a house is a less stressful experience.
- How do I get a mortgage and what are the requirements?
When looking to get a mortgage all you need is to have a good credit score, stable income, low debt-to-income ratio, adequate down payment, and meet the lender’s eligibility criteria.
You also need advice from your sales executive to advise on different types of mortgages you have access to, and which financial institutions have the best rates, this is to avoid onboarding exploitative mortgages.
- What is the process of buying a home?
The process involves pre-approval for a mortgage, finding a real estate agent, house hunting, making an offer, home inspection, appraisal, closing, and moving in.
During this process it is very important to involve your lawyers in every step of the way to avoid being conned or scammed.
Owning a home is a significant milestone that comes with responsibilities and financial considerations. It’s essential to educate yourself, seek guidance from real estate professionals, and carefully evaluate your options to make informed decisions about homeownership.
At Centum Real Estate, we are here to guide you through your process of wealth creation. For details on our projects or to speak to an agent about our homes for sale, call us on +254 747 019 977 or fill in the form here.
Edited by Frida Nthoki – Marketing Department