Everyone dreams of having their own home. A place they buy and build on their own. Buying a home is more an emotion than an investment. And being all sentimental, a lot of people tend to miss out on very important things that should be kept in mind while buying your dream house. Here is a complete guide for first-time home buyers.
About the home!
While buying a home, make sure to emphasize the following points for a better experience.
1. Find the type of home that will best suit your needs
There are numerous options when purchasing a residential property.
For example –
- A traditional single-family home
- A duplex
- A townhouse
- A condominium
- A cooperative
- A multifamily building (w/ 2-4 units)
All these options have their own benefits and drawbacks. The choice of property will depend on your homeownership goals.
2. Look out for the specific features you want in your ideal home
Buying a home is no doubt the biggest purchase of your life thus it should fit both your needs and wants as much as possible (while it’s always good to retain some flexibility). Your list should include – size, location, neighborhood, structure and layout, durable appliances, etc. Go through real estate websites to get an idea of properties offering features that are important to you.
3. Find a guide to help you through the purchase
A real estate agent can help you in locating houses that satisfy your needs and price range. They can also meet with you to view those homes. Not all this, once you have finalized an option they can also assist you in negotiating the purchase, making an offer, securing a loan, and aiding in paperwork. A good and experienced real estate agent can save you from many pitfalls that might occur. They work on commission from sale proceeds.
About the finances!
1. Know how much you can afford
Nobody wants to end up being house poor by purchasing a house they couldn’t afford. Your agent will definitely give you tempting options that are way above your budget but you should know your limits and not stretch your budget to buy that particular house. Consider your tax returns, monthly mortgage payments, financial goals, etc. Before setting up a budget.
2. Know your credit score
Lenders will always look at your credit reports and history before lending such a huge sum. They want to determine if you’re a liability. So before jumping to the purchase, check your credit score and errors if any.
3. Keep your financial documentation ready
It is advisable for first-time homebuyers to keep their financial documents readily available in proper order. Your lender would want to see your financial records before approving you for a mortgage. You need to keep your W2’s, tax returns, loan statements, bank statements, credit card statements, etc. on display.
4. Get pre-approved for a mortgage
Be around to shop for a good mortgage that works best for you – fixed mortgage or adjustable-rate mortgage. Inquire about associated fees or insurance if any. Get pre-approved for a mortgage as you would be asked by the seller to show the mortgage Qualification letter to prove that you’re a serious and qualified buyer.
5. Be prepared for the associated costs
The most important thing to be kept in mind while buying a house is that it’s not just about the purchase of a building, it’s also about tens of associated costs which complement it and are HUGE! You should have a plan to adjust these costs in your budget. They might be hidden but adds up a good sum to your budget. Several of those are –
Closing costs are basically the fees lenders and third parties charge after you’ve made the purchase. It includes- attorney fees, surveys to verify properties, inspection and appraisal fees, title insurance and searches, mortgage evaluation fees, etc.
House owners’ insurance
If you didn’t buy the home outright, your lender would ask you to have a policy on your new home before closing the deal. the policy can be purchased out of your pocket or added to your monthly payment. Be sure to look around for such policies as many bundling deals are available at discounted rates. Compare rates to save money.
In the excitement of having a new home, the first-time buyers tend to forget that there’s an unavoidable cost of shifting from your old house to the new one. You might also have to pay a penalty if you’re breaking a rental agreement in order to move into a new house. There are additional costs of hotel stays, packing materials, and renting trucks to move it.
Homeowners’ association dues
While moving into a community, many associations collect their monthly or quarterly dues which you’ll be asked to pay shortly after moving in.
Decoration and Renovation
It’s very difficult to find a house that is designed and structured exactly as you wanted. You’ll probably have to change some of it or maybe the whole of it. While few changes might seem small, the costs keep adding up once you start with the process.
So keep these expenses in mind while buying a new house for the first time.
The buying process
Now that you’ve confirmed your decision, make sure to keep your sanity intact as it might be a cumbersome process. Here’s what you can expect as part of the process:-
1. Find a home
Make sure to take advantage of all the options and finalize that best suits you. Consider your needs choice, and budget before making a decision.
2. Consider your financing options
First-time home buyers have a huge variety of options and resources available to take help from. Ensure that you go through all the options so that you don’t end up spending more than required. Check your financial statements too before getting into the process.
3. Make an offer
Your real estate agent can help you with making an appropriate offer along with any conditions that you might have. You can continue to make counteroffers until you get the most desirable deal. Before submitting your offer, take a good look at your budget.
4. Have an inspection
It’s always advisable to have a trained professional do a home inspection of the property for quality safety and the overall condition of the place. It helps you alter the offer if there are any problems in the property after inspection.
If you’re able to negotiate your best deal without affecting your budget and there aren’t any significant problems with the house, then you should be ready to close. It’s basically a lot of paperwork over a short span along with clearing all the closing costs.
Now that’s you know what all it takes to buy a home, make sure to follow all the steps to avoid unnecessary hassle and workload.