Is your apartment too small? Are you ready to have a yard? Is it finally time to buy a home? Once you have made the exciting decision to buy a home, what do you do next? In reality, buying a home for the first time can be a daunting task. There are houses to be hunted and contracts to be signed. The to-do list might seem endless. Rest assured! Tons of people do it every day. In order to point you in the right direction, here are a few tips to help guide you as you begin looking for your first home:
Before you start shopping for a home…
- Get pre-approved! This will help determine your budget for buying a home. Your lender will help you stay within a reasonable spending limit according to your debt to income ratio. Spend too little and you might miss out. Spend too much and you could end up losing your house. Keep in mind that pre-approval does not guarantee that you will be approved when the time comes to apply for a loan.
- Beef up your savings! Hopefully, you already have a chunk of change in your savings account. Knowing your budget after getting pre-approved can help you determine what to do next. Keep in mind the following:
- Down Payment – You need one! Most down payments are about 6% of the mortgage loan. There are assistance programs to help you with a down payment if you do not have enough. Your lender will be able to help you find your best options.
- Closing Costs – Depending on if it is a buyer’s market or a seller’s market, you could end up paying all of the closings costs. This is not unusual. Do not be afraid to ask them to pay for the closing costs or even splitting the costs with you. Your real estate agent will be able to help you negotiate.
- Other Expenses – Before you deplete your savings on a down payment and closing costs, keep in mind that you are about to become a homeowner. It is more expensive than renting since you are responsible for maintenance and repairs. You might need to have a budget for moving as well. Keep some cushion in your savings for things like this.
- Determine your needs vs your wants in a home. What is necessary for you? Is it a good neighborhood near good schools? Is a new roof a must have? Do you want a big yard? Be flexible. Cosmetic items like appliances, paint, and light fixtures can always be changed later. DIY projects can end up giving you equity once you are ready to sell.
Starting the process…
- Find a good realtor and a great lender. Don’t be afraid to shop around. You are finding your home for the next several years if not forever. Ask around. Shop around.
- Look for a home that is congruent with your goals within the next five years. If you want to start a family, get a few extra bedrooms. If you want to build a garden, look for a bigger yard. Be careful not to get too far ahead though! Remember to stay within your budget.
- Inspections and insurance
- Never buy a house without an inspection! Things like bad electrical wiring or old plumbing can produce significant repair costs that you are not prepared to pay. An inspection can reveal expensive problems. Even though you will be paying for the inspection, it will be worth it in the long run.
- Jessy Adams, one of our Personal Lines agents, recommends checking the flood zone in addition to the age of the roof and HVAC system. These are all factors that are considered by underwriters when qualifying for coverage and finding the best price for you.
- When you find the house, call your insurance agent. Kim Taylor of Taylor Agency says, “Get your insurance agent involved early on in the home buying process. He or she may be able to make suggestions that could be helpful during the due diligence period.” You will also want plenty of time to make sure that you are getting appropriate coverage. Call Taylor Agency today to find the right coverage for you!
After you have made your purchase…
- Change your address on all of your accounts to your new address– banks, credit cards, loans, Netflix, etc.
- Transfer your utilities to the new place. Running water would be sorely missed after a long day of lifting heavy furniture.
- Relax and enjoy your new home!
Crone, Emily Starbuck. “25 Tips for First Time Home Buyers.” NerdWallet, 29 Jan. 2018, www.nerdwallet.com/blog/mortgages/25-tips-for-first-time-home-buyers/.