Can you imagine the feeling you'll get seeing a SOLD sign in front of the home that you just purchased?
Exciting, isn't it?
Buying your first home is one of life's most precious memories. Getting married and starting a family are equally defining moments in your life, but where do you think your marriage and children will flourish and grow?
In your home, of course!
First-time home buyers might feel entirely overwhelmed by the prospect of such a large purchase. After all, you're probably going to spend a few years in your first home, so you want to make sure it's a good investment.
We've compiled a list of the top ten tips for new home buyers, so if you're feeling overwhelmed by the process of purchasing your first house, read on for our home buying tips.
1) Be Realistic
Go into the home buying process with realistic expectations. If you're not making the salary of a blockbuster movie star, that gorgeous $10,000,000 mansion you saw online probably won't be a realistic goal for you.
2) Do Your Math Homework
There is a lot more to buying and affording a house than just looking at the listing price and deciding it's appropriate. You have to take a look at your income and your budget to determine if the home you're looking at is affordable for you.
Use online calculators to determine how much you can afford to pay for your mortgage each month. Some real estate websites have mortgage calculators right in each listing to make this easy for you.
A great rule of thumb is to follow the 28/36 rule. The rule states that you shouldn't spend more than 28% of your total monthly income on house-related expenses. This includes your mortgage payments, home insurance, and property taxes.
Meanwhile, your total household debt should not exceed 36% of your monthly income.
The 28/36 rule is a common calculation that home lenders use, but there are plenty of calculators online you can access to try it yourself.
3) Homeowner Grants
You might be surprised to learn that some homeowners, especially first-timers, qualify for government grants or aid programs that are designed to help with the needs of homeowners.
There may be specific requirements that you'll have to meet to qualify for grants or aid programs, but you might be surprised at just how many there are at your disposal.
Check with your federal and local governments to see if there are any First Home Owners Grants that you can access to help offset some of the costs of purchasing your first home.
4) Be Debt-Free (Or Close To It) Before You Close On Your House
Many home buyers don't realize just how expensive owning their own home can be.
You may think you've hit the jackpot if your mortgage payments work out to be about the same as what you were paying for rent in your apartment. However, owning comes with many more costs than renting.
As a homeowner, you'll be responsible for all maintenance issues that come up. Oven broken? You'll have to pay to fix (or worse, replace) it. Lawn getting out of control? You'll have to buy a mower, hire someone to mow it or commit yourself to life in a quasi-jungle.
Ideally, you should be debt-free with a hefty emergency fund in place before closing on your new home.
5) Use a Realtor
You may pride yourself on being a DIY-er, but having a realtor be able to provide you with real estate tips for buyers in your search for a new home has many perks.
Realtors keep your best interests in mind. There might be a few bad eggs out there, but for the most part, you'll find that your realtor is as invested in getting you the home of your dreams as you are.
Realtors are experts in their craft. They know about houses that will suit your needs before they even hit the market or MLS websites. They'll be able to inform you about nearby amenities. If you're a parent, you'll be able to quiz your realtor about schools in the neighborhood.
6) Research Neighborhoods
You may think you know what neighborhood you would like to live. Living there might be different than driving through there, however.
There are a lot of factors you need to take into consideration before you choose a neighborhood to move into.
You may want to look at the crime rates of the area you're considering. Is there a lot of theft that happens there? Your realtor will be able to inform you of the statistics you need to know.
If you're a parent or will be having a family in the future, you'll want to look at the nearby schools. How far of a walk or drive would it be to get your child to their elementary, middle, and high school?
You'll want to consider how far your commute will be to work, too. We recommend driving through the neighborhood at peak times to get an accurate idea of what traffic will be like.
If you can't take time off work to drive to your desired neighborhood, another great way to gauge what your commute would be like is to use Google Maps. Zoom in on the area during a time that you'd be commuting to see what the traffic is like.
7) Get Pre-Approved
To avoid any delays in the home buying process, we recommend getting all of the necessary pre-approvals. Visit different mortgage companies to see what you can afford and have a pre-approval letter handy.
You need to make sure that you have the liquidity necessary to afford your down payment. You're also going to want to make sure that you don't have any looming credit issues that could potentially cause significant delays in the process (and the loss of your dream home if someone else snatches it up).
8) Don't Buy Just Any Home Insurance
If you already have automobile insurance, you might be tempted to stick with the same insurance company to keep things easy.
The truth is that prices for home insurance can vary dramatically from company to company. We recommend setting out to get a few quotes before you commit to an insurance plan.
9) Go to Open Houses
Ask your realtor if there are any upcoming open houses that you can attend. If you've decided not to work with a realtor (tsk, tsk), check out various MLS listings online to see when and where the next open houses will be.
You can spend as much time in the home as you like during an open house and will be to perform more in-depth searches. Take your time to get a comprehensive view of the home. You should look for discolorations in the walls or roof, strange odors and be checking every nook and cranny.
Use this time to quiz the selling realtor about the home like when it was built, when things were last replaced or repaired, and how major home systems like the air conditioner work.
10) Don't Settle
If you're not extremely excited to be placing an offer, don't.
You might be eager to begin your journey as a homeowner, but you should never feel like you're settling for something that you can never envision being your home sweet home.
What Are First-Time Home Buyers To Do Now?
Now that you're equipped with the best advice for first-time home buyers, get out there and begin the hunt for your dream home. Do some calculations with your budget and income. Search the MLS listings. Research realtors to find one you click with. Scope out neighborhoods you can imagine yourself growing and thriving in.
Are you still feeling overwhelmed? Check out our Advice section to have more of your home buying questions answered. Happy house hunting!