If you want to buy your first home, then it’s time for some financial discipline. That’s the way money works, if you want something you need to set a goal, make a plan and work hard towards getting it. That’s especially true when becoming a homeowner for the first time.
A lot of 20-somethings put off buying a home because they think they can’t afford it. When in fact the truth is anyone can afford to buy a home if they’re realistic about their goals, flexible and disciplined with their savings.
Here are five tips to help you buy your first home:
Consider a fixer-upper
Your first home probably won’t be your last. A starter home is a smaller home that lets young couples get used to the idea of owning a home and all the expenses that come with it. You want to make sure the cost of the home – from the purchase price to the annual property taxes – are affordable. One way to do that is to look for a fixer-upper instead of a new home.
“In some areas, the housing market is very low on inventory, especially new and/or homes in top shape. Foreclosures and short sales, though, can offer better prices if you can deal with the home’s maintenance needs.” says RealtyTimes.com.
“Many first-time home buyers don’t take into consideration the extra expenses needed to maintain a home. They carefully calculate the mortgage, down payment, homeowners’ association dues, property taxes, and other hard costs but they neglect to factor in the everyday repairs and maintenance for the property. Things like a new water heater, stove, microwave, central heating/air conditioning systems, washer/dryer and dishwasher repairs and even plumbing and roof repairs.”
Look just outside your comfort zone
When you buy your first home the method is a process of elimination. You should make a list of ideal locations and start looking at listings within your price range. If you can’t afford a home in the exact location of your dreams, it’s time to start working outwards towards a larger radius.
Sometimes moving just outside the neighborhood you want or the city can help save thousands of dollars on the purchase price of your first home.
Get a real estate agent
Hiring a real estate agent can save both time and money when you buy your first home. They have contacts and listings that may not yet be public, they know what questions to ask sellers and can help you along each step of the home buying process. There is no cost for buyers because a real estate agent’s fee is paid by the seller. Let a professional help you buy your first home because the entire experience will be a lot easier.
Be ready to give up amenities
Just like you may have to look outside your ideal neighborhood you may also need to give up some amenities in order to buy a home at the price you can afford. Make a list of everything you want, then split it into two categories: must haves and really wants. You can live without the amenities that aren’t necessary – at least with your first home. You can look for a bigger house with a pool and double car garage when buying your next home.
Set realistic goals
If you want to buy your first home, it’s ideal to start planning two to five years ahead of time. It’s very difficult to save a large lump sum of money in a short period of time, so set realistic spending goals that you can afford. Making saving for a down payment part of your regular monthly budget will help ensure you keep saving and don’t get sidetracked with other spending.
Opening a separate account for home buying expenses is a good idea because you can track your progress along with the associated costs. Remember that there’s so much more than the down payment to consider when you buy a home. Also take property taxes, moving costs and furniture expenses into consideration when saving for your first home.
