Congratulations on your decision to buy a home!
Buying a home is no easy feat and is one that you shouldn’t be discouraged by.
However, it is imperative that you do it correctly to ensure that you prioritize things that matter most to you and your family. This means that is important to take a step back and plan things correctly before making the big jump.
In this article, I will walk you through the ten things that I took into account when I bought my first home.
If you are considering to buy a home, there are many things to think about. You should make sure that you are doing all the proper researching to ensure the best results for when you are buying a home.
This will be an extensive guide catered for home buying dummies. Lots of these were essential for my family when we were thinking about how to buy a house, and I’d like to share them with you to ensure that you can buy the dream house that you have your eye on.
1. Getting Your Finances in Order
Before you can even think about buying a home, it is essential to be aware of all your financial numbers are in order.
This includes your credit card statements, salary and bills and making sure that buying a house won’t put too much a dent in these things. Make sure you have worked on building your credit score to get loans easier.
I would also recommend talking to a budget planner to see how you will pay for a mortgage on your home and what that will entail. They will give you valuable advice on what homes you should really try for and what you can afford without getting stressed out.
For a first time home buyer, sitting down with a budget planner is a good idea to make sure that you know what you are signing up for.
Remember, the right time to buy is when you are confident that your financial situation is stable and will not change much over the next few years.
Beyond the apparent discussions of affordability, it is worth it to talk about sustainability.
Make Sure your Credit Score is up to Par
This is important when buying a home.
If your score is lower than 660, you might have to pay more or either pay more regarding interest. When choosing loans, this becomes a huge thing that comes into consideration.
The higher, the better, so if you want to buy a home, it might be smart to work towards a better credit first. Set up your credit score in such a way that you are ready for paying all the money that mortgages and loans require.
Try not to get in the situation where you are getting rejected for more loans than being approved because companies and banks will take advantage of that. They will start to realize that you are desperate for a loan and will make your interest rate significantly higher.
If your credit score is low but is still considering to buy a home, there are many options to feel like grants. You can even get many private loans with not that high of an interest.
Check your Savings
Before home buying, you should make sure that you have some savings compiled. Buying a home and being dependent just on loans and mortgages is not the way to go.
Save up some money before you commit to buying a house. The more you put down in down payment, the better.
A safe number is around 20%.
Never look for a perfect home and then your bank account because it is only going to trap you more. Look at your finances, how much you want in your bank account after you purchase your home and the average house price.
Once you take into consideration how much you really need, work harder, save more, don’t buy those branded jeans when you know there are cheaper options out there. After you get to that goal, then start searching for houses.
This will make the process a lot cheaper and stress-free.
2. Keep Schools, Safety, and Nightlife in Mind
It is critical to consider all the factors when you even begin looking for a home.
This includes deciding how vital schools, safety, and nightlife (or other things may be). You may also find that you may have to compromise on certain things and that is ok as long as it will still be a net positive for your family.
I wanted to live in a place that had a good night scene close by for weekend fun. Additionally, I wanted my kids to have the opportunity to attend an excellent public school that was close by.
Lastly, I did some thorough checks on the overall safety of the neighborhood to make sure that my kids would be safe getting around. I would say that the research phase took a long time, but it was worth it before I could be confident about buying the home (and made for some peace of mind also).
You might have really young or no kids at the moment, but you never know how life is going to turn. Being committed and owning a house has a lot more thinking involved in it. There is a high chance you won’t move for a long time after buying so it’s better to be safe than sorry.
3. Look at the Commute to Work & Work Benefits
You’ll want to make sure that the commute to work every morning is within reason. The average commute time to work should be no longer than 45 minutes each way.
For this reason, you’d want to confirm that the freeways are routes to work are accessible and reliable. This is because you will be making this long stretch every day and peace of mind is essential.
Also, it is worth your time to take a step back and make sure that the job you are in is one that you want to keep for a while. This is because this is probably the steady source of income for most of your big purchases and you’d want to be sure that you can rely on the fact that you will have this job for years to come.
Additionally, if there is HR planning at your workplace, it might be a good idea to sit down with them and see if they will help you solidify your house buying decision. Often time company HR departments can provide help and support to you by advising how to go about this purchase.
4. Take a Look at Your Retirement Goals
This is a long-term thing.
That means you need to be committed to your decision and your house. By this I mean make sure that your home fits in properly with your long-term goals. Plan out the next 5,10, 20 years of your life and make sure that you can see yourself in the house of your choice for a long time to come.
This means making sure that you are happy with the city, neighborhood, state, etc. Often, it helps to research the cost of living and other things that may be making your housing more expensive. If the house fits all of those standards, then it is a good decision to buy that house.
Decide when you were planning to retire and make sure you also have enough money for that. In the best case scenario, you can work for the next 10-15 years to also save for your retirement but also keep that in the back of your mind to make sure that you are making decisions that will behoove you in the future.
Also, do a quick check about the monthly mortgage payments and make sure that they don’t detract heavily from your monthly salary. And don’t worry too much — this part can get stressful, and you may feel like there are too many details, but soon everything will become commonplace.
5. Finding a Skilled Realtor
The journey to see a skilled realtor is half the battle. The realtor can be a critical asset when you look for that dream home. The realtor will open your eyes to things that you never before thought to consider.
The most significant way a realtor can help is by providing expertise in the area. Become friendly with them and ask them for advice about the neighborhood and maybe even go with them to speak to a few other people already residing in the district,
This will allow you also to get a second opinion for everything which would be nice. The realtor is well versed with the area and will help you make sure that you are not overpaying for anything.
Again, as with most things make sure you shop around a little before deciding on any one person. Throughout this journey, you should want to find someone who will help you with things you are most unsure about.
But Keep in Mind, A Real Estate Agent Is Not Your Friend
Even if your agent is your friend, she won’t necessarily look out for your best interest. In fact, she can’t, if she is working for the seller. Unless individually is working as a buyer’s agent, she is legally obligated to work for the interest of the seller.
The seller, after all, is the one paying the commission.
If you say something like “I might go $5,000 higher,” she is obligated to pass on this information to the seller.
Even with a buyers agent, be careful, because people talk – even good agents. Don’t say things you don’t want to be known by all. Also keep in mind that agents make money only when there is a sale, and they make more on more substantial sales. This might mean less than perfect objectivity when helping you choose a home.
Your agent may rush you into buying a home because ultimately it is good for them, so they get a commission. If you can buy without their help, you can save money as well because you won’t have to pay for the agent fees.
An agent isn’t always the most reliable person that can help with a home. Sometimes your gut decision works best too, even though an agent has a lot of knowledge. They are very focused on making money for themselves that they might not help you make the best decision that is ideal for you and your family.
6. Appreciation in the Market & Rent Market
It is also a good idea to study the area that you are planning to buy in. This is when online tools like Zillow.com will be of great use to you.
Zillow can tell you how much the property value has changed over time and whether or not the area is one that you should be investing in. Monitoring the city and getting data for a five year period would be a good idea and make sure there are no immediate red flags. This way you can be sure the area will give you a good return on investment.
Further, if you are not entirely confident that you want to be buying a home, consider instead looking up the rental market also. It would be nice to know if the area is suitable for renters also if that will fit your current budget a bit better.
Low Offers Work … SOMETIMES
The real estate agents out there won’t appreciate this tip, because low offers are embarrassing for them to bring to a seller. It may even be embarrassing for you to make the offer.
However, I have a friend who embarrassed himself into a lakefront home for 15% less than it was worth. Would you like to immediately increase your net worth by $40,000 when buying a home?
Here’s how low offers work: rarely. You’ll let many lovely homes getaway, you’ll spend a lot of time making offers, and you’ll annoy real estate agents.
However, as long as you don’t have time constraints or the fantasy that there is one “perfect” house for you, making low offers can be an excellent way to save money.
But here’s one last home buying tip: If none of your offers even get you a counter-offer, you may be wasting your time and trying to go too low.
If you continue to make low, but reasonable offers, there is a very high chance that you will find a winner house that comes into your price range. Admittedly, one home will come your way with a price that may be reasonable to you. Making low offers is a good idea most of the time, even though it may be hard to find a winner right away.
7. Look at Tax Benefits That You are Eligible for
You should be aware that there are many tax benefits to buying a home. If you are paying interest on your home, you are eligible for many tax breaks. When you rent a house, all the money goes to the landlord. However, once you buy, money comes back to you in taxes.
You become eligible as soon as you enter a mortgage contract so that means you can buy any home (single family, condominium, etc.) and still apply for those benefits. The only downside is that taxes will become a little bit more complicated, but year after year that will also become to look like a piece of cake.
8. Be Sure to Check Up on Utilities
Many times people don’t consider checking utilities like electric or gas or water.
It is a good idea to understand the city and how those things work. You will also want to make sure that the water lines are set up correctly and that the city has excellent infrastructure for providing that. The same thing will go for electrical bills as well.
The worst thing you want to have is you move in and a few weeks later something goes wrong and it ends up costing you thousands of dollars to fix.
Moving into a new home will mean that you will have to worry a lot more about the logistics of all the bills, but it should be nothing too wrong since most American cities are set up with it as well.
If you want to be extra fancy, you may want to consider the possibility of installing solar panels in the future as well because that will save a decent bit of money too.
9. You Should Consider a Home Inspection
There are services in which you can get your home inspected to make sure that everything inside is functioning as you would imagine.
You can hire someone to do a quick visit to your home and check everything.
Make sure there are no problems in the home. Paying extra for some repairs and other things is not very inviting, especially when you have put so much money down for the actual house. You might hear some things you didn’t consider before and will ensure that you are making the right investment.
Common problems usually include asbestos or mold that may have accumulated in places you may not be aware of. Also, there could be leaky roofs or a possible termite problem which can end up being a significant problem.
For this reason, it is worth your while to have all of that investigated to avoid costs in the future.
Also, make sure you are checking for radon (which is a harmful odorless gas) that may be present in the home, and it wasn’t made aware to you. Doing this will save you from having to spend thousands of dollars that you might need to spend because of a problem you find later.
In the situation that there indeed is some problem with the house, make sure the previous homeowner fixes it up before the deal is closed to ensure the issue is dealt with in a way that saves you money,
10. Ask Yourself: Can I Afford It?
Now, this seems like the fundamental question, but it is essential to double triple check that the house is within your budget.
It is not uncommon for people to aspire to buy a better house that is a little bit above what they can afford and hope that it will still be a financially safe decision.
However, when it comes to a house, it is better to be safe than sorry.
It may also be a good idea to wait 6-9 months and save up until then to better analyze the housing market.
This may mean also forgoing some remodeling expenses until later.
When I first moved in, the garage needed major fixing. However, I decided to postpone the expenses after my bank account took less of a hit so I could afford it. Then, the following year, I was able to get my house remodeled expertly.
Look Into all the Costs
Make sure you have a plan for every kind of cost that may pop up when home buying. Many different types= of little odds and ends are attached to being a first-time homeowner. Check it out and see to it that you have a plan for those costs all thought out.
If you are a single mother, there are many loans specifically for you to use.
Have a Mortgage Plan all Thought Out
Make sure you have talked to your mortgage company and are ready with every payment aspect. You can even ask them how much a home buyer is expected to pay. They can also guide you through any question you may have. There are many options you can consider as a low-income family as well.
You probably have already heard the usual home buying tips. Here are three that aren’t as common but help to land houses that are cheap and below market price.
Being in the market for your first home is a great feeling and a decision that is very exciting.
However, it can be stressful too, especially being confident in your decision and choices. But it can be done effortlessly.
Buying a home seems is a scary task that can get overwhelming fast. The truth is that there is a lot that can go wrong but being careful and doing your research will prevent that from happening. Know who you can trust and reach out to so you and your family can live in a happy home after all.
If you follow (or loosely follow) the ten things outlined above, I can guarantee that the process will feel less tedious. This is because those steps prioritize the holistic process and making sure the decision overall makes sense for you and your family.
Hopefully, these tips for first time home buyers were helpful. Feel free to reach out or comment below if you have questions or your tips to add!