7 Essential Tips for First Time Home Buyers
You have made that decision- to buy a home, congrats! Now what? Before you start imagining yourself hanging up pictures on your new walls, cooking in your new kitchen, or planting a garden in your new backyard, there are several factors to take into consideration before buying your first home. In today's market with low inventory and high demand, being a prepared buyer is even more critical. Here are 7 essential tips for first time home buyers:
1. Get clear on what you want. This is the most important part of your preparation. You are about to enter a shopping experience that is unlike any other. At times, it can be stressful and difficult. There is a lot of money on the line and a big commitment to be made, so prepare accordingly. Get clear on what you really want and what you are willing to compromise on. This will make your home shopping experience much more efficient and will give you a map to go off of should tensions run high. The better prepared you are, the better chance of having a smooth transaction.
2. Do your research. Home shoppers today are more empowered than ever before. You have so much information at your fingertips. Go online and find the areas you want to live in. Narrow down the neighborhoods you want to consider to three or four, and focus on those. Learn about the cost of the things you really want and the cost of the things you can do without. The more knowledgeable you are the better you will be at negotiating a good deal.
3. Talk to the bank. Preparing to get a mortgage in advance of your actual purchase will be super important. Before you start looking at houses you should have a discussion with your lender. The lender will be able to give you an honest assessment of what your finances look like, how much house you can afford and what your rates will be. You want to know all of this – what it will really cost you – before you start looking at homes you can't actually afford. Find out what your monthly payment will be at different amounts and determine what your personal limits are as well. Depending on your credit, the lender may be willing to give you far more than you need. Once you know the time is right to buy a home make sure you get pre-approved by a lender. Make sure you understand the difference between getting pre-approved and pre-qualified for a mortgage. Without a doubt, you will want to get pre-approved as a pre-qualification letter is not worth much. A savvy Realtor representing a homeowner will pick up on this right away. If you are competing with other buyers and are not financially prepared, you could lose out on your dream home!
4. Think about the future. Is this going to be a starter house that you will move out of in five years? Is it going to be a property that you fix up and flip? Is it going to be the home for your new family that you will be in for 10 or 20 years? Your long term plans will help dictate your purchasing choices. It is important to understand what you really want this home for before you go and sign any papers and spend any money. One of the biggest mistakes first-time homebuyers make is not thinking about their long term plans.
5. Find a good Realtor. A real estate agent can prove invaluable when shopping for a home. If you find one that is good – an agent that is finding people the homes they want at a price they are happy with – then much of the work will be done for you. The agent will talk about what you want, will run you through much of the above-mentioned areas and will help you find the houses that match your must have criteria. The agent will also be an effective negotiator, meaning that you will probably get more house for your money than if you went at it alone.
6. Set a timeline. The situation you are in is uniquely your own. You want to set a timeline for when you will find and buy a home – a timeline that reflects your realities. If you have bad credit that needs to be cleaned up first, for instance, you will need to spend some time working on that before you actually start house hunting. If you need to move right now, that is another factor in your timeline. Give yourself some restrictions so you will be encouraged to move at a steady pace and get the job done. Hunting for a house can be quite stressful and it is not something that should be drawn out any more than necessary. Determine what you want, work with a Realtor, and get it as efficiently as possible.
7. Understand your fiscal responsibility. Another problem that first-time homebuyers don't always properly think through is the financial responsibility of owning a home. A high percentage of buyers will think about making their mortgage payments and nothing else. If you have been renting for a while, or even living with mom and dad, it is easy to see why this can happen. Unfortunately, owning a home comes with quite a few more additional first-time home expenses that you may not have considered such as appliances, furniture, and even taxes and insurance (which are usually wrapped up within your mortgage payment). These are all important things to consider when putting together your home buying budget.
Happy house hunting!