5 Things First-Time Homebuyers Should Know
The home buying process can be daunting! Here are a few things recent first-time homebuyers say they wish they knew before buying their first place.
1. Budget for the unexpected
Lots of first-time buyers don’t fully comprehend the amount of money that’s spent before getting the keys to their new homes. While it’s important to determine your future mortgage allowances, it’s just as important to save an emergency fund for those unexpected costs. For example, if you’re currently renting and haven’t finished out your lease or your place doesn’t allow for a month-to-month agreement, you could end up having to pay for two houses at once. Or you find your “dream” home before your planned moving timeline, you’ll likely need a financial buffer. More often than not, buyers find themselves stuck between their current living expenses and those of their new mortgage agreement. Buyers are also responsible for paying all inspection fees for each home they intend to make an offer on. And then there are expenses like moving costs and storage facilities, if needed. All in all, you’ll want to set aside some extra cash for those expenses that pop up before closing!
2. Take your time with mortgage lenders
There are so many home lender options out there, so making the decision isn’t an easy one. As a first-time homebuyer, it’s key that you understand this process thoroughly! Whether you do the research yourself or use a loan officer (oftentimes referred by your agent), don’t get too hasty. Read the fine print of every offer you receive.
If you take the time to consider various lenders, you may find yourself in a position to negotiate the terms of your mortgage. One of the major things to consider is Private Mortgage Insurance (PMI). If your down payment is less than 20% of the home sale price, there’s a good chance most lenders will require a monthly PMI fee. But if you shop around, you might have the opportunity to arrange a more favorable long-term agreement.
There are pros and cons to every loan, and everyone’s situation is unique. Always supplement advice with that of a professional.
3. The “perfect” home doesn’t exist
There’s a stat out there that “Buyers decide in the first eight seconds of seeing a home if they’re interested in buying it.” Following your gut is important — but too often, new buyers make rash judgments. Before starting your search, jot down a very detailed list of “must-haves,” “nice to haves,” and “deal breakers.”
Is a big, fenced-in yard a must? Only interested in homes with updated interiors? Require a certain number of bedrooms & bathrooms? Then try to narrow your list so only 3-4 items are in the most extreme categories (must-haves & deal breakers). But don’t get too attached just yet: Your Realtor will be able to help guide you to truly understand what you can get for your budget in the area you’re looking at.
Many times, it’s nearly impossible to find a home that checks off all the boxes, but your real estate pro will be able to guide you along the way.
4. Consider the ROI
It’s relatively easy to factor which type of home and location will suit your current lifestyle needs. A condo or apartment may be cheaper upfront (and it might even be within walking distance to your favorite coffee shop or gym!). But don’t lose sight of the long-term investment. If and when you decide to rent or sell your first home, it’s very valuable to consider your future buyer. For example: Consider is the area’s school district. Would your home be attractive to a family? If the answer is yes, there is a good chance you’ll have a more successful selling experience when the time comes.
5. Pay close attention to the inspection
Ready to make an offer? It’s time to hire a licensed home inspector (or sometimes multiple home inspectors) to evaluate the home’s condition. However, keep this in mind: no home, no matter the age, is in perfect condition.
A good inspector will point out all the issues about the four main inspection points: HVAC, electrical wiring/panels, plumbing, and roofing. These four areas will directly affect your home insurance coverage, as well as more costly short and long-term repairs. The status of the inspection report will also play a role in the negotiation process between the buyer and seller. An experienced Realtor will know exactly how to advise your next steps.
Overwhelmed by the process? Let’s grab coffee and chat today.