Seven Time and Money-Saving Tips For First Time Home Buyers

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Should You Rent or Buy?

So, you are done with renting and dealing with landlords. The market is good. Mortgage rates are low. You think it is time for a home of your own. Maybe you just got married, or moved, or had a baby. Maybe you want a place you can fix up your own way. Maybe you just like the idea of being a homeowner. Whatever is motivating you to leave the land of renting for home ownership, you are not alone.

Home ownership is part of the American dream and often makes more financial sense than renting. When you own, you may have the responsibility for repairs, taxes, heating and the like, but unlike your rent, which goes right into your landlord's pocket, your mortgage payment is buying you equity in the property that is your home, and, of course, as you probably know, the interest on your home mortgage is totally tax deductible.

Home ownership is a financial investment as well as a life changing event. You need to sit down and take a realistic look at both your finances and your short term and long term goals to decide whether or not buying rather than renting is for you. All real estate markets are local and conditions vary widely. All couples, families, and individuals have different and unique housing and financial preferences and needs as well. There is no "one size fits all" solution.

For instance, if you plan to move within the next five years renting is, in most cases, actually going to be your better,cheaper option. but if you are ready to stay put for awhile, or if rents are skyrocketing in your locale, but there are lots of foreclosed properties for sale and you have your financial house in order with a 20% down payment and some extra for closing costs and moving, now is a great time to buy.

What You Need To Know

It's a long way from taking virtual tours of houses for sale on the internet to making your own home ownership dream come true. The key to finding and getting the home of your dreams is to think ahead and follow a few simple rules. I've bought and sold several homes of my own and for four years I sold residential real estate for a living. I've seen all the mistakes a first time homeowner can make( not to mention having made many of them myself ) Buying your first home can be a horrible or wonderful experience. Gathering information, taking an honest financial and lifestyle inventory and getting help from competent professionals can make all the difference. If you really do your homework, you will end up with a better, happier, first time homebuying experience.

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Seven Important Tips For First Time Home Owners

  • Do Some Research Whether you are a single person buying house just for you, or half of a couple or larger family unit making the purchase, you need to sit down and really evaluate your housing needs and preferences. Does buying really make sense right now? Can you afford it? If the answer to both questions is yes, the next step is to figure out the basics.
  • Make two lists: "must haves" and "would be nice". Think in terms of things like: neighborhood, number of bedrooms, large vs. small yard, townhouse or condo vs. single family suburban house, city vs. country, new construction vs. older home, bathrooms, garages, swimming pools,schools and shopping. There is so much to choose from, you need to narrow down your options before you start to look. Every family has its own personality and lifestyle considerations. Talk about yours honestly before you set out on a real life search. Most people pretty much know what they want, but many have never verbalized it or thought about it. Especially if you are a couple or whole family, or even two unrelated singles buying together, you need to at least be starting with some parameters in mind.
  • Surf sites like Realty.com for photos of actual houses and virtual tours and then discuss them. Drive through neighborhoods that interest you if you have time. Attend Open Houses on week-ends. This gives you a chance to see the insides of real houses and meet and size up a variety of real estate agents. You will learn a lot this way, both about what you really want in a home, and what is realistically available in your price range. Once you've done this, it is time to choose a good real estate agent who can guide you through the rest of the process with confidence.
  • As a First Time Buyer, You absolutely need a real estate agent and it is important to find one you trust and feel comfortable with. This person will be part of your team and will be working with you and for you from first showing to the day the deal closes. Most areas use multiple listing so one agent will be able to arrange everything. This one person will be a key player in your home buying experience. A good agent will go over your finances with you, help you get mortgage pre-approval (a must before you start actually looking at houses), set up showings, provide information on communities, and help you through the complicated process of making an offer, getting inspections, dealing with bank appraisers, mortgage requirements and trouble-shooting everything until the deal is closed-- all usually at NO cost to you,the buyer. Remember, this may be your first time at this, but your agent is a professional and does this all the time. Nine times out of ten, a good agent can get you a better deal than you could get for yourself. You might be able to buy your second or third house without an agent-- but definitely not your first.
  • Once You've Found Your Dream House make an offer, knowing that there will probably be some negotiation on the final price. Here's where an experienced agent can be particularly helpful. Never(and I do mean NEVER) buy a house without getting a home inspection or engineers report. Usually, once your offer is verbally accepted and a contract of sale drawn up, you will be free to set up inspections and should definitely do so. Things like termites and Radon, not to mention leaking roofs and rotting beams often show up, especially in older homes. These need not be deal breakers, but you do need to know what you are getting into and the seller needs to either fix things or lower the price. The negotiations are not over until they are over.
  • Know When to Let Go If you and the seller cannot see eye to eye or if major structural defects come to light that should be deal breakers, know when to let go. One rule of real estate is that no house is the last house. If you lose out on one house, even one you really wanted, there will always be another around the corner that suits you just as well-- maybe even better. You are choosing from a specific pool of properties on the market at the time you are looking. New properties come on the market every day of every week. Remember that when you are negotiating. Don't fall in love with your new home until after the haggling is over and done with.
  • The Final Walk Through and Signing the Papers. You are in the home stretch. The mortgage commitment has been made, the title is clear and the paperwork is all done and it is time to close the deal. Bring your check book and a certified check for your cash down payment and fasten your seat belt. You will be writing checks to a variety of people at the closing and you will probably meet the seller for the first time. Closing costs for buyers vary from place to place, but include such things as mortgage insurance, lawyers fees, transfer taxes. You need to have an idea of how much these closing costs will be and have cash in the bank to cover your checks. You will also be able to do a final walk through of the premises before closing just to make sure the property is being delivered in the agreed upon condition and that there are no unpleasant surprises. Do not fail to do this. You would be surprised at what some people consider " broom clean condition." At closing you will receive the deed and the keys to your new home.

Following the seven suggestions I've outlined above for the first time homeowner will save you time and money and lots of heartache. It pays to take the time to think through your wants and needs and to prepare both emotionally and financially

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Comments 11 comments

Victoria Lynn profile image

Victoria Lynn 4 years ago from Arkansas, USA

Great hub! Buying a house in my late 20's was one of the best decisions I've ever made. 5 years ago, although the little house isn't yet paid off, I was able to buy a roomier house without having to sell my old one, so now I am getting rent income on that house. I have good equity in my current house, too, since I have paid lots of extra on the principal. When I sell either house, I'll make a good profit, which I wouldn't have with renting. I'm sold on buying! I can see renting if staying somewhere for just a few years, though.

I wrote a hub asking the question about buying or renting a home. I'm going to link your hub to mine, as you give some great specifics as far as the ins and outs of it all.

Excellent! Many votes!


robie2 profile image

robie2 4 years ago from Central New Jersey Author

Thank you Victoria Lynn and thanks for sharing your own experience here. I too am all for owning rather than renting, though I have done both at various times in my life. Owning usually makes better financial sense and renting works when you are not sure how long you are going to stay in one place or when you want to travel light possession-wise. I'm going right over to your hub to have a look right now and thanks so much for linking.... much appreciated.


mackyi profile image

mackyi 4 years ago from Philadelphia

Buying a house was really a solid investment until the recent housing bubble. You could buy a home and remodel it etc, then sell it at a later date at a profit or when you are ready to retire. You could then rent an apartment, studio, or buy something much cheaper and easier to manage or maintain, such as a condominium. The rest of the money could be used to supplement your retirement income. Now that pending sales of used home fell 1.4 % in June, which is the second decline in three months, and the actual sales of used homes tanked 5.4 %, the largest monthly drop in 16 months, I am wondering if we are going to see a bottom of this housing downturn anytime soon! At the same time Owners of Apartments are capitalizing on this housing market downturn --- the price they are charging for rent is so ridiculously high! However, I must say, you have really made some extremely important points. Presently, buying or renting is really a matter of personal choice!


robie2 profile image

robie2 4 years ago from Central New Jersey Author

Thanks for the comment mackyi. The recent housing bubble was just that-- a bubble. Dare I say a scam perpetrated by greedy bankers and brokers? Ah that is another hub for another day.

You are right about what was possible during that hot, too good to last housing market. As always people got greedy and lost sight of the fact that a home is more than an investment-- it is your "home" Personally, I am glad that things are getting back to what I like to call a " new normal" All housing markets are local and it is hard to extrapolate from national figures, but yes renting or buying is a life choice as well as an investment choice and needs to be made with more than just money in mind....you are right about rents. It's good to be a landlord right now:-)


furniturez profile image

furniturez 4 years ago from Washington

Way to cover it from all angles, providing detailed instructions like this is huge. I think one of the most noteworthy things you've added is about the "must have" vs "would be nice" list. A lot of people (myself included) have a hard time deciding what they can live without so they just get it all. It's something that's important to know that way you can budget accordingly.


robie2 profile image

robie2 4 years ago from Central New Jersey Author

Thanks loyddonald and furniturez-- glad you both liked it and found it useful. Thanks for the very positive comments-- I'm on my way over to both your profiles now and really pleased to meet you.


angelina12 profile image

angelina12 4 years ago from Navi Mumbai

its really very very usefull, great for new buyers...


JamaGenee profile image

JamaGenee 4 years ago from Central Oklahoma

Great tips, robie. However, my own home buying experience was a nightmare - and a verrry expensive one at that - that I don't care to repeat. EVER. In case I forget, I only have to recall one friend's recent experience. The home she and her husband had built 30-some years ago became too big and expensive for her to maintain after he died, so she put it up for sale and moved into a retirement complex. The proceeds from the sale were supposed to augment her retirement savings, but for the year and a half she waited for a buyer, she had to endure the stressful "double whammy" of paying rent at the retirement village AND the utilities, taxes and maintenance, etc for the house. "Home ownership" is now a four-letter-word to her.

I think owning a home is great when kids are growing up - gives them a stable "base". After they leave home, though, I see no logical reason to be tied to a structure that may no longer suit the pared-down lifestyle of the Empty Nester. Just sayin... ;D


Sally's Trove profile image

Sally's Trove 4 years ago from Southeastern Pennsylvania

Know When To Let Go - wise words. When I was hunting for my current house I saw other houses that appealed to me more. Fortunately, I had a great agent who was more on top of my resources and requirements than I was. When one of the "darlings" on my list became unavailable I was pissed off. But my agent said to me, "Things will show themselves as they are or are not meant to be. This one wasn't meant to be. You'll see." How true. The house I finally bought was right, where the "darling" I focused on, as I found out later, would have been a nightmare. A good agent will help you keep things in perspective and help you let go. Super hub!


Earl S. Wynn profile image

Earl S. Wynn 4 years ago from California

My wife and I have been considering the idea, what with prices being so low at the moment. Hmmmm. Great hub! :)


robie2 profile image

robie2 4 years ago from Central New Jersey Author

It just might be time to think about buying a home rather than renting. Mortgage rates have never been lower. Always good to see you, Earl. Thanks for stopping by.

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