5 Basic Things to Know When Buying a Home for the First Time
Buying a home is exciting. It is adventurous. It’s also a little bit scary. There are a lot of things to know about buying a home. Since it is such a big investment, you certainly don’t want to try to learn by trial and error. You want to know what you’re getting into before you actually buy your first home.
Here are five of the most basic things that you need to know when you are buying a home for the first time:
1. It’s worth it to work with a realtor. Many first time homebuyers wonder if they should work with a realtor or just try to figure out how to buy a home on their own. It truly is worth it to work with a professional. This is someone who understands all of the ins and outs of getting the right property. They’ll be able to answer the questions that you have and advocate for you so that you get the best deal. They have specialized knowledge and experience that you simply do not have. Yes, you will spend some money to work with a realtor. However, it can save you both money and time to have a professional on your side. One related thing that you’ll need to know is that there are realtors and real estate agents. They basically do the same job. The difference is that a realtor has been officially certified by the National Realtor Association. This helps to guarantee that they have the best training. If you’re just starting to look for help from a professional then it’s smart to narrow down your search to realtors rather than general real estate agents.
2. There is an entire new language to learn when you buy property for the first time. This whole conversation about realtors vs. real estate agents brings up another really important point that you’ll need to know when you first buy a home. That is that there is an entire new language that you probably aren’t too familiar with but need to know when buying a home. The term “realtor” is only one example. You’ll also need to know terms like “closing costs” and “private mortgage insurance”. It is worth it to do some general reading on the topic of buying a home so that you can get familiar with this language before you begin negotiating for a home sale.
3. Find out if it’s a buyer’s market or a seller’s market. Obviously cost is a consideration for any homebuyer. You want to get your home at the best price possible. One of the things that dictates the cost of the home is whether the area is currently in a buyer’s market or a seller’s market. These terms just refer to who essentially has the upper hand in the deal. For example, when there are a lot of homes for sale at affordable rates then it is a buyer’s market because the buyer has a lot of options to choose from and the seller needs to offer terms that make their home the most appealing in the market. Obviously it is ideal then to purchase your home during a time when it is a buyer’s market. Of course, there will be other things that affect the price of your home but this is something to consider as you begin looking to buy your first home.
4. It is crucial that you save up for a down payment on your new home. It is sometimes possible to get a home loan without having any down payment for the property. However this is a mistake. First of all it means that you have to take out a huge loan, which is harder to repay than a smaller loan would be. Secondly it means that you will most likely be required to obtain private mortgage insurance, a type of insurance that lenders make you pay for if they consider you to be a risky borrower. And finally, it means that you won’t have any home equity at all when you first get your new home. You don’t want any of these things. Take the time to save up at least 20% of the cost of the home before you get your first property.
5. There are programs specifically for first time homebuyers. It is often possible to get deals that are only available to you the first time that you buy a home. For example, I have known people who were able to purchase a home for fifty percent of the cost because they went through a first time homebuyer’s program. There are pros and cons to these programs and they do have limitations. For example, you are usually required to live in the home for a certain period of time before you can sell it or rent it out. You may also not be able to make a large profit off of the home when you do sell it. For example, the people I know who got their properties for 50% must sell to someone else in the program so it’s also someone buying the property at 50%. It is definitely worth it to look into what benefits are available to you as a first time homebuyer. However it’s also important to look at the fine print before deciding to work with any of the programs offering you first time homebuyer deals.
Do you have any other tips for first time homebuyers seeking basic information about the process?