There are many reasons to buy your first home. You’re ready to put some roots down, you’re tired of throwing your money away on rent, or you want to make an investment that will benefit you through the years. Regardless of how you arrive at the need to buy, the first time can be nerve wracking and full of questions. Where should you start? What are the steps? What’s a mortgage? Here are 13 tips to help you look for, find, and buy the home of your dreams on the first time around the real estate block.
1. Look at the big picture. What type of home can you comfortably buy on your budget? Fannie Mae suggest 28% of your income for housing costs. But, know yourself. If you regularly spend less than 28% of your income on housing, then maybe that percentage is too high for your lifestyle.
2. Figure out how much you can afford in monthly payments. Owning a home costs more than just the initial purchase. Calculate mortgage payments, utilities, repairs and routine maintenance to make sure you’ll be able to afford to keep a home, and not just buy it.
3. Decide what you need in a home. There are things you want to have and things you can’t live without in your future home. Figure what falls into which category. Make two separate lists: one for needs and one for wants.
4. Get prequalified. Knowing how much you will be able to borrow will help decide which homes you look at. It will also help home sellers trust you.
5. Decide on a mortgage that works for you. There are many different types of mortgage, or loan, plans. Find the one that’s right for you. Click here for a breakdown of the most common types of mortgages. (link to mortgage piece)
6. Check the comparables. Do research on homes that have sold recently in the areas you’re interested in. Ask your agent to make a Comparative Market Analysis for you, if she hasn’t already.
7. Don’t just search online for homes. It’s a great place to start, but nothing is better than walking through a home to know if it will work with your family and belongings. Search for homes, go to open houses, visit homes, and always bring your agent. They’ll know what problems to look out for.
8. Make sure you are comfortable with the neighborhood. Drive around the neighborhood during the day and after dark. Look at the cars parked in front of homes and who hangs out in the area to get a sense of who your neighbors will be. If you’re not comfortable driving around, you probably won’t enjoy living there.
9. Think of the details. What’s the area’s job market like? Which schools belong to the home you’re looking at? Does it have easy access to freeways, grocery stores, and other necessities?
10. Make an offer on a home only after careful consideration. Look closely at the home you want before submitting an offer. It’s only a house until you a buy it, so don’t let your emotions have the final say. You don’t want a home with a weak foundation, cracks in the wall, or with a lack of storage space. Once an offer you submit is accepted, you are legally bound to buy the home.
11. HOA? Mello-Roos? Does it matter? HOAs, or Home Owner’s Associations, and Mello Roos are recurring payments that help a neighborhood or city maintain a certain quality for its residents. Make sure you know if the property you are interested in comes with either of these costs and decide if it is something you want to take on in your home purchase.
12. Don’t forget about closing costs. Closing costs are usually around 1.5-2% of the cost of the house. Depending on the market, you could pay all, part or none of these costs. Who pays how much should be addressed in your offer on the home.
13. Hire a buyer’s agent (it’s free!). Sellers are responsible for paying the listing and the buyer’s agent; neither will be paid until the deal goes through. Be picky before hiring. Agents sink their own resources into helping you house hunt. If you don’t get along or don’t fully trust an agent, keep searching until you find someone you’re comfortable with. Contact a First Team Real Estate office near you to find agents to interview.
With these tips under your belt, you’ll be better prepared to start your journey. Be patient and be thorough now when you’re getting started so you will have no regrets after your purchase. The best way to love your future home is to make sure it fits all your needs and doesn’t over-stretch your budget.
