Buying your first home is a big step for many adults. Whether you are 22, 28, or 35, the process can appear intimidating, but it doesn’t have to be. I recently purchased my first home and am slowly getting settled in. If you’re considering purchasing a home, you’ll find a few pieces of advice below to help you navigate the entire process, from before you’ve even found the perfect house to after the closing.
Know Your Budget and Get Pre-Approved –It doesn’t make much sense to look at a house in the $150k-$175k price range if you can only afford a house in the $125k price range. Get pre-approved so that you can spend your time looking at houses that fit within your budget.
Speaking of budgets, make sure your anticipated monthly payment isn’t going to break your monthly budget or leave you with no room to contribute to a savings account. Budgets can be created with spreadsheets, smartphone apps, and even the old-fashioned way with paper and a pencil; the key is to have a way to hold yourself accountable and monitor your spending. Don’t forget to include expenses in your budget that you might not have previously had, such as property taxes, homeowner’s insurance, home repairs, trash pickup service, etc.
Do Your Research – This particular piece of advice applies to several aspects of the home-buying process.
Find a mortgage lender who will help you find the best type of mortgage program to meet your needs – Mortgages are not “one size fits all”. Your lender will tell you about different types of loan programs, such as Conventional and FHA. Also, ask your lender if you qualify for any first-time homebuyer programs that provide money for down payment assistance. Find a real estate agent with who you are comfortable working. Your realtor should listen to your ‘wants’ as far as neighborhood and property features and give you practical information to help you find what you want. After all, you’re going to be the one living there and paying for it! When you’re considering making an offer on a property, you (and your real estate agent) should research recent comparable sales so that you can formulate an offer that is fair to both you and the seller. Insulting a seller with an unreasonably low offer isn’t going to help you get an offer accepted.
Ask Questions – Escrow, Private Mortgage Insurance, amortization, earnest money, etc…It’s easy to get caught up in the jargon of the real estate world. If you don’t understand the terms that your mortgage lender, realtor, inspector, or anyone else is using, ask them to explain it to you! Personally, I didn’t understand many of the construction and architectural terms that my home inspector used, and I wasn’t afraid to admit it. Everyone has to start somewhere in the real estate market; don’t be ashamed to admit that you don’t know everything.
Prioritize your Projects – Most people’s first home purchase comes along with a list of projects. This list might include painting, landscaping, flooring, new appliances, etc. Whether you are doing major remodeling or minor improvements, you’ll find that it’s really easy to come up with the list, but financing the list is a different story. Don’t get too caught up in working on the house that you start to resent what you’ve gotten yourself into or you’ve broken your budget. Focus first on the projects that contribute to the safety and soundness of your home. Then, slowly work on the cosmetic improvements. The to-do list never truly goes away, so your wallet (and your sanity) will thank you when you break it up into smaller, more manageable chunks.
Even though there were a few challenging times during the processing of buying my first home and immediately after closing, I have found it to be a very rewarding experience. While the home-buying process is different for every person, the end result should be the same. When you leave the closing with keys in your hand, you shouldn’t feel stressed out or like you’ve made a terrible decision; instead, you should have an overwhelming sense of accomplishment and look forward to watching your investment grow.