A Place to Call Home: 4 Tips for the First-Time Home Buyer
Congratulations on being in the market for a home for the first time! You're probably very stressed out and unsure how this is all supposed to go. Don't fret - by working with the right people and knowing the right bits of information before you start, the process will go smoothly. Here are four tips for all first-time home buyers.
Get an Agent
A real estate agent from a firm like Foxfire Realty, Inc. or a similar group is very much a worthwhile investment when you first begin shopping for a home. Many people think that an agent will only add stress to their search, but often the opposite is true.
Real estate agents come with a number of advantages. Because they are highly familiar with the process of buying a home, they can walk you through all the dos and don'ts, as well as help you avoid potential legal issues. They can also help you gain access to properties before they officially come up on the market for sale and help you find what you're looking for in your preferred neighborhoods. It will likely take you much less time to find a home that you love if you choose to work with an agent.
Buy Less House than You Can Afford
You have likely gotten approved for a loan and so you might be ecstatically shopping around for a home at that price. Have you stopped to think what will happen if your financial situation changes though? If you or your spouse lose their job, will you be able to afford the mortgage? There are a number of different costs that go into buying a home that are not easy to see. A few examples of these "hidden costs" may include:
- Property Tax
- Utility Costs
- Homeowners Insurance
- HOA fees
- Closing Costs
For these reasons, It's generally a much better idea to buy less house than you can afford in order to prepare for potential financial uncertainty down the road. This can be done in a number of ways. First of all, you might choose to buy a smaller house than you were initially looking at, or buy a house on a smaller property. If a smaller house doesn't seem appealing, you could also consider looking at buying in a different area. Buying a home in an urban location, near a city center, or by an ocean or other large body of water can dramatically raise the price of the property. Looking in a different state is an easy way to find lower prices for the same size of home, but you don't necessarily need to go that far. Sometimes even a neighborhood a few miles away from where you were first looking can save you a large sum of money.
Move Much? See how you stack up!
People who move more often may have a better idea of what type of house they want. How many times have you moved in the last decade?
Properly Budget for All Costs
Budgeting to include the hidden costs mentioned earlier is a great way to make sure you end up with more money than you need, rather than less. Considering down payments is a good first step when budgeting. While some lenders may permit less than a twenty percent down payment, you should be aiming to pay twenty percent if you can.
It might be tempting to try and put down less to save money in the short-term, but the lower your down payment the more you will end up paying in interest over the life of your mortgage. This means you should start saving for the down payment as early as possible to give you more time to save up. Ideally, you will want to have enough money in the bank to cover a 20% down payment, as well as anticipated hidden costs like closing costs, insurance, and HOA fees.
Some of these costs are fairly stable; closing costs, for example, are typically around 6% of the total transaction no matter which real estate agent you work with. Agents might tell you that the seller is responsible for this cost, but remember that anything the seller has to pay for will probably raise the asking cost of the house. Other costs, like HOA fees and insurance fees, can be quite variable. Do some research on the area before preparing to make an offer on any home.
Come Prepared to Negotiate and Compromise
You're unlikely to find a perfect home for the perfect price. Everything you look at is probably going to have tradeoffs. Focus on the big and most important things to you rather than the small details you can change later, like carpeting and paint. You should also not be afraid to haggle with the sellers. For example, if your inspection turns up that the roof really needs to be replaced, see if you can get the sellers to fix that and take the value of that repair off the cost of the house.
Being prepared and having professionals walk you through the process can make buying your first home a much less stressful experience. Before making the decision and jumping in, learn all you can about the process. Doing this will let you know what to expect and how to handle anything that goes wrong. You'll be moving into your new home in no time!