Five top tips for first-time homebuyers entering the market, it definitely pays to know what is coming. Top Tips for First-Time Homebuyers. Being uncertain of your budget and not planning can lead to overspending and other major problems down the road. Be aware, be prepared, and keep reading to get ahead of the challenges you will face as a first-time homebuyer. Know that buying a home can be a good investment, but can also be stressful, expensive, and confusing.
Smart strategies like working with professional realtors and home inspectors, getting a mortgage pre-approval, and buying in an up-and-coming area can help you stretch every dollar. Here are five Top Tips for First-Time Homebuyers
1. Save, scrimp, and postpone purchases
When I was a bank lender, I saw too many people screw up their mortgage pre-approvals with previous major purchases, car loans, and empty savings accounts. If you want to get a new home, you have to make sacrifices and trade-offs before you start house hunting.
To begin, you can only make a home purchase if you have set aside money for a down payment. The more money you can put down, the smaller your bank loan will have to be.
Typically, your down payment will be 20% of your purchase price. Certain lenders will allow you to put less down; however, they will likely require you to purchase mortgage insurance, which increases your monthly payments.
When you get the urge to buy a home, your first step is to start saving as much as you can
2. Use a Realtor
It is tempting to go at it alone, but buying a home is a major transaction. It is worth paying someone to represent your interests during what can be a difficult process.
Realtors work hard to earn their commissions, and they end up doing a lot of work for free if people do not buy. This means they have the incentive to help you get what you want.
This being said, do not feel pressured to go with the first Realtor you meet! If the connection is not right or they are not listening to what you want, then they will not get you the house you are looking for.
You can also rely on your realtor to help you through the paperwork and introduce you to a real estate lawyer, a mortgage broker, and an insurance broker. It is their job to ensure you find a house, close the sale and complete all of the necessary paperwork to finalize the transaction to the letter of the law.
3. Keep an open mind
When you walk through an open house, it is easy to pick out what you hate. That wall color is awful. The kitchen cabinets are orange. The décor is just I cannot even.
It is easy to dwell on the negatives, but all of those things are easy to fix. Focus on the layout, structure, electrical system, plumbing, and the roof. Cosmetic changes are cheap, so do not let a mint-colored toilet bowl derail your dream.
4. Keep your emotions in check
When it comes to home buying, you must keep your emotions in check. Realtors and banks are okay with you spending as much as you “can afford,” but this can get you into serious trouble.
Everyone wants to live in their dream house, but so-called “starter homes” exist for a reason. Starter homes are smaller, and might have older kitchens or dated bathrooms. In other words, they are livable. Getting a cheaper older home or one that is in need of renovation might be a better choice if you have a lower budget or if you know some (professionally skilled) people
who can help you renovate. Realistically, if a gorgeous, move-in-ready place is more what you are looking for, then you might have to go small and consider a condo.
Your realtor can be a great help in finding you the best place that suits your budget, but you need to clearly state that you are unwilling to go over whatever your personal limit is.
No matter what white picket-fenced, perfectly landscaped, in-ground pool boasting home they show you, you need to come back to this statement: “I’m sorry, but that’s out of my budget.”
5. Research, research, research
They say the three most important things in real estate are “location, location, location.” Instead, you should focus on “research, research, research.”
Before you start house hunting, read up as much as you can about homes in your local market. Learn about the different neighborhoods and their price points, crime rates, transportation links and nearby schools. Take advantage of free information on local real estate agents’ blogs and local magazines.
It is possible to overload on real estate information, so focus on your priorities. By the time you are ready talk to a Realtor, you should have formed some idea of where and what you want to look at.
