Tips for first-time home-buyers can be neatly fit into three categories based on where you are in the buying process: tips for prior to the purchase, the sale itself, and once you own the home.
Tips for Before the Purchase
Here are five pieces of advice for before you buy the home:
Find a home that really suits you.
There are various types of properties that you can choose, including single-family houses, townhouses, condominiums, and multi-family properties. Looking at these various options, you can decide what is within your price range and fits your personality.
You can also lower your price by getting a place that needs work, says financial journalist Amy Fontinelle, “although the amount of time, sweat equity and money involved to turn a fixer-upper into your dream home might be much more than you bargained for.”
Figure out what that home must include.
You obviously want to be open to different options when you buy a home, but you should also have a sense of what you want – neighborhood, where the bathrooms are, good-quality kitchen appliances, etc.
Take a look into mortgages.
Shopping is not the first step. Instead, find out how much house you can afford upfront so that you don’t end up falling in love with a home that is outside of your price range.
Don’t max out the amount allowed by the bank.
It’s often not a good idea to use the entire amount of mortgage authorized by the bank. After all, keep in mind that owning a house is similar to owning a car. You aren’t just making a monthly payment like you are when you pay rent. Consider these other factors as well:
- Down payment
- Property taxes
- Homeowner’s insurance
- Closing costs
Think about getting a pro.
You can work with a real estate agent to help you through the process.
The Actual Buying Process
Now, here are four tips for making the purchase:
Figure out your financing early in the process.
Your options for financing as a first-time homebuyer are diverse, explains Fontinelle, “including federally-backed loans and loans for homebuyers who don’t have the standard 20% minimum down payment.”
Don’t forget to negotiate.
Whether you are buying a house yourself or are working with a real estate agent, you want to make sure that you get the house at the best possible price. Typically that involves offers and counter-offers. You then make a deposit, the house goes into escrow, and you have about 30 days to inspect the property and finalize the sale.
Always, always get an inspection.
It’s important to get a home inspection. What can be found by a professional inspector?
Rick Yerger of HGTV’s House Detective says that water damage is the biggest issue for homebuyers and something that inspectors should be expertly familiar in identifying. “Of the many homes I have inspected,” says Rick, “water damage to the structure has been the most damaging and costly, causing foundation problems, rot and the dreaded mold.”
If the inspector finds something, move back to the negotiating table.
Stay focused for closing time.
Everything look good? When you get ready to close, here are a few basics to remember:
- Get the home appraised
- Search the title to see that the person selling you the house actually has the authority to sell it (in other words, do they own it outright?)
- Get mortgage insurance
- Possibly obtain a piggyback loan if you aren’t doing the full 20% as a down payment.
- Finish all the mortgage documents themselves.
Once You Own the Home
What about once you’ve move in? Here are three quick tips:
Continue to put money away.
You may have been saving up for the home and now feel that you can loosen the pursestrings and buy a bunch of new things to outfit your place. Be careful. What if you need a new roof? Create an emergency fund.
Don’t worry about where the market is right now.
People can sometimes stress themselves out excessively looking at the housing market go up and down. It’s not a big deal what the housing market is at any given moment. It’s irrelevant to your situation unless you are in the process of selling. The biggest factor in whether or not you profit from your home sale will be that you are able to hold it rather than sell it immediately. That way you can wait until the market is right and you can find a buyer for the best possible return.
Don’t assume that the house will bring you a lot of money.
Fontinelle cautions against being overly optimistic. “Even though you own a home, you should still continue to save the maximum in your retirement savings accounts each and every year,” she says. “[Y]ou won’t necessarily make a killing when you sell your house.”
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By Kent Roberts