A First Time Home Owner’s Experience and Tips
My journey to purchasing a home for the first time was an interesting one. It had its twists, ups and downs, sweet and bitter moments. So I thought I’d share my experience and pointers for earning the First Time Homebuyer title. Trust me, it is a title that is well earned and can be a great investment down the line:
Tip 1. Do your research!
By all means do not just jump into something that could affect the next 30 years of your precious life. Find out how the market is not just in your area, but across the overall housing market, period. When I first wanted to buy, the rates were golden. The market was starting to make a comeback and the prices on homes in my area seemed pretty reasonable. I read all kinds of articles that described the pros and cons of being a homeowner. I talked with realtors who didn’t mind giving me insight on the home buying process and the current market (a lot of them were pretty honest with me and didn’t pressure me into buying right away). All of this was done about a year before I finally purchased my home. I took my time and looked at everything thoroughly. There was no rush to make moves.
You should also research what your entitlements include as a homeowner. There were many First Time Homebuyer programs in my area that provided assistance with closing costs. Banks and mortgage companies were also providing some useful benefits. When I started my house hunt, I attended first time homebuyer seminars that were sponsored by the county and state. They were extremely helpful for me as I became familiar with housing terminology and walked away with great reference guides and contacts. You’ll be surprised to find what is offered at local, county and state levels for homebuyers. If you’re a veteran, police officer, teacher, or firefighter, you will find even more perks and benefits to help you purchase your home.
Tip 2. Save, save, save!
This is a pretty obvious one but the details and depths of saving will be emphasized here. Yes, we all know that we need to save for the down payment closing costs, and all that good stuff, but one’s mind must be prepared to transition into home owner status – especially where the finances are concerned. It’s one thing to afford to get in a home, but it’s another thing to be facing foreclosure status a year later. While I was in research mode, I also started saving based on estimates of my down payment and closing costs. What I didn’t do was think about the money I will need once I was a home owner; meaning that I should have put money aside specifically for home owner expenses as well, not just for the day I settled and closed on a home. Once you move into a house, things happen. All sorts of things happen. No matter how new or old the home may be. Within the first six months after closing on my home, my basement flooded from sewage back up, the sump pump misbehaved, and the air conditioning unit crashed. Fortunate for me, I had a good home warranty and home insurance policy in place. What made me a bit nervous was having enough for the deductibles. I had just moved into the house and was working on building up my savings again and then – boom- I have to fork out emergency cash. I didn’t think about these particular moments when I was saving up for the home buying process.So don't just focus on being able to afford a mortgage, you must have extra money for expenses that come with a home. That way when situations come up, you won’t really feel the pain of having to pay the deductibles… or the plumber who has to come out and stop the toilet and bathtub from hurling. It’s best to be prepared as much as possible when it comes to house emergencies.
Tip 3. Find a good (and I mean really good) real estate agent.
I cannot stress how important this part of the home buying process can be. For my journey, it was probably the most painful part because I didn’t have a very good agent. To my dismay I chose to go with this person because they were a family friend and I figured they would take care of me. Wrong! Never again. The beginning was easy, looking at different houses and comparing the prices. But when it came to the nitty-gritty, negotiating with the seller and following up with me after closing, I was left hanging….several times. Then on top of that they referred me to the worst loan officer one could ever come across. My paperwork was displaced a couple of times and at some point I had to leave work early, drive across town and submit a new package. I never received updates unless I asked. I know agents and loan officers are busy, but if they’re trying to move my application along and need additional items from me, shouldn’t they at least let me know? Don’t just let my application sit around and we have a closing date to meet! Plus I was going back and forth with my rental office because the closing date kept changing. They were so ready to see me go when I finally closed. But I digress.
Take the time to formulate specific questions and interview different agents before you finally select one. If the agent is serious about their job and is sincere about helping you, they will take the time to answer those questions with no problem. How long have they been in real estate? Do they charge fees? How many homes have they sold over the past several months? These are the types of questions you should ask and then some. Even though my experience with the real estate agent was a nightmare, I knew of another agent who was also a friend of mine. They didn’t mind offering their advice while I was going through my house woes. This saved me several times. I asked the right questions to my agent and loan officer and made the right moves when my agent didn’t come through. For example, on the day I was scheduled to close, my friend advised me to take one last look at the place before going to settlement. I asked my agent to come with me but they weren’t able to make it, so I just went on my own because I just had that “feeling”. Well thank God I did because I pulled up to the house and saw that someone attempted to break in. Since they weren’t able to do so, they went in the back yard and dismantled the compressor for the copper pipe. I took pictures, got my agent on the phone, and got the contract amended. The seller covered the damages the next morning and everything was fixed and replaced. Imagine if I had gone straight to settlement and signed without looking at the house one last time. Those damages would’ve been on me to handle. I still kick myself to this day that I didn’t just use my good friend as my agent.
Lastly, choose an agent that will not disappear from the face of the earth once you close on your house. There are actually agents that stick around, provide you with contact information on plumbers, handymen, contractors, etc. They will go over payments and how you should look a year after purchasing your home and even give you a referral gift (cash!) if they make a sale off of someone you referred to them. Trust me, they’re out there.
Tip 4. Have a good home warranty in place.
Home warranties are not the same as home insurance. If your basement floods from sewage back up for example, your home insurance will cover clean up and restoration costs. But if your refrigerator breaks, you’re pretty much on your own without a home warranty. It’s worth the investment and there are pretty reasonable deductibles out there. You can pay anywhere from 50 to 80 bucks anytime they have to come out and look at an appliance or system that isn’t working. Depending on the situation you may have to kick out a few more bucks, but not to the point where you’re breaking the bank. When the fan in my air conditioning unit gave out, they replaced it with a new one (which I didn’t have to pay for) and added Freon to the compressor. The Freon is what made me pay extra, but the entire transaction was about $200 by the time everything was done. Of course the prices may vary so shop around the different home warranty sites to find what best suits you and your home. Unlike home insurance, you can get a home warranty policy at any time – it doesn’t have to be when you first get the home.
Tip 5. Enjoy your new home!
You did it! It may have been a long and crazy journey, or a short sweet one, but you did it. You are now a homeowner and it should be seen as an accomplishment, not a burden. Yes, owning a home comes with new challenges, but none that should make you regret your decision. I am very satisfied and proud of the choice I made. It wasn’t an easy road to get here, but I am reaping the benefits of being a homeowner. The location is good, I don’t have to worry about making too much noise that will disturb neighbors underneath me and I don't have to worry about people making noise upstairs. I have the space to get creative and decorate however I please. The financial perks don’t hurt either. The tax benefits each year are something to look forward to.
Besides, with the rent prices at crazy rates these days, you might as well invest in property that you can call yours. Happy house hunting!