There are a lot of things to consider when it comes to buying your first home. It’s a huge decision, and you want to make sure it’s the right one. But how do you keep yourself from getting totally overwhelmed?
Here are some key things to keep in mind when weighing your dream home options:
Is the neighborhood right for you? You’re not just buying the house and lot…you’re also buying the experience of living in the neighborhood it’s in. So make sure it fits your personality. We’re homebodies, so we’re very happy in our quiet neighborhood filled mainly with older people and couples whose kids have grown up and moved out. You might want to be more in the thick of the action, close to shops and restaurants and night life. Visit your potential home during a few different periods throughout the day to get a real feel for what living there might be like.
Know how much of a mortgage you can afford, not how much you can qualify for. The Hubby and I technically could have bought a more expensive house…we qualified for a higher mortgage. But when we looked at the numbers, we realized we weren’t comfortable with the monthly mortgage payments we’d be stuck with if it bought something on the high end of our range. Just because you can buy a $250K house doesn’t mean you need to. You might be just as happy in a $150K house, and you’ll have more money each month for other expenses. Also make sure to get pre-approved for your loan before house hunting so you don’t waste your time checking out houses way out of your purchase power.
Check out all your mortgage options. There are all kinds of mortgages out there, from adjustable rate mortgages to fixed rate home loans. Make sure to do your research to make sure you’re getting the type of loan, interest rate, and term that best fits your needs. Shop around at different banks and lenders. This is a big, long-term decision, so you don’t want to make it lightly.
Check out first-time home buyers’ programs. Depending on things like your personal income, you may qualify for incentives like lower down payments, lower interest rates, and other assistance.
ALWAYS get a home inspection. I cannot believe there are still people out there who skip this step. It’s like getting married to someone the first day you meet him, having no idea who he really is or what issues you two might have down the line. You need to know what you’re getting into. Will the roof need repair in a few years? Is there a huge problem with the electrical? Once you know all the potential problems of the house, you can go back to the seller and ask for concessions like a drop in the price or having them fix the issues before closing date. Or, if it’s too much work and the seller isn’t cooperating, you may need to walk away.
What other tips would you offer first0time home buyers?
photo credit: Images_of_Money
Make sure you are comfortable with your lender and they are willing and able to answer any questions you have about the process or any of the terminology. Our guy was so patient, cheerful, and always available to talk to us. It made us much less stressed and much more informed going through the process for the first time.
I wish we had realized the full extent of what we were facing by buying a previously foreclosed, flipped property. While the “flippers” made some great changes, including adding hardwood floors and new kitchen counter tops, they didn’t address a lot of problems that had built up over the years under the previous owner since their main goal was for it to look good. This front-loaded many home repairs for us whereas it’s my understanding that most new homeowners encounter home repairs in waves. We love our house and with time, money, and TLC, we will slowly get it in shape, but I think we would have been less surprised if we had understood what it meant for it to be a former foreclosure.
That’s a very good point, Marie. Both your lender and your realtor should be ready to help guide you through the process and help you understand what to expect, because as a first time buyer, the whole thing can be really overwhelming.
First time buyers should definitely be careful about foreclosures. Bank owned properties can take forever to close and run into all sorts of potential issues. And if you’re buying a flipped house, ABSOLUTELY make sure to get it inspected to make sure it wasn’t just a surface makeover. (Although everyone should get a home inspection before closing, period. You never know what you’re going to turn up!)
Not doing a building and pest inspection is an EPIC mistake. Your analogy to marrying someone on the first date is 100% correct (it’s also what most do in job interviews too BTW).
Some other very useful things are:
1. The contract should be subject to financial approval from the specific bank you have pre-approval with and them ONLY.
2. The contract should be subject to a building and pest inspection and it MUST state that it’s completed “satisfactory to YOUR approval” no one else’s.
3. When you determine a deposit amount, make sure you will still have at least $4,000 in your account after for other up front costs.
4. If there are Body Corporate Rules, have you received and read them?
5. If the property is still being built, the contract MUST have an agreed upon completion date in it to prevent the build dragging on.
6. If there has been any renovations on the property, have you contacted the council to check on them and if they have a permit for it?
7. Have you inserted in the contract a date upon which your offer will expire? An example time period is 3 days, this way you know if your offer is rejected and can move on even if they don’t call back.
Excellent points! You clearly know what you’re talking about. 🙂