What You Should Know When Buying Your First Home
The first time for anything is always daunting. No matter what the event might be, however, preparation and knowledge can get rid of the nerves and add an edge to your performance.
This theory definitely applies to your first experience buying a house.
Although there is always excitement when buying a home for the first time, journeying into unknown territory of the housing market can be a little scary. Fortunately, numerous first-time buyers have gone before you, so if you learn from their mistakes and successes, you have a better chance of walking into the home of your dreams.
Here is a guide chock full of tips and information all first time homebuyers should know.
The Pre-Buying Process
As mentioned earlier, knowing what youre getting into before you start can get you far. Even if youre under a heavy time restraint, take some time to prepare everything you need before jumping into the whole process. Seriously, laying out some groundwork ahead of time will save you time, stress, and maybe even money, in the long run.
Establishing Your Team
Having a great team of professionals to guide you through the whole home buying process would be a good place to start.
Find a real estate agent familiar with the area you are interested in, and with an expertise you can trust to help you figure out which houses work best for you. Also, look for a helpful and trustworthy loan officer or lender to help with the financial aspect of things. Ask family and friends for some recommendations, check out reviews online and shop around.
When you have a few prospects lined up, conduct some interviews to narrow down your choices. Remember, as important as it is to find professionals with a lot of experience and great qualifications, its also important to find people you are comfortable with and can rely on.
Getting Your Finances Together
A lot of times when people decide to purchase home, they immediately go out and start looking for their perfect dream home. As fun as house hunting is, however, its important to have your finances in check beforehand so you know which houses you can afford.
Getting a pre-approval, which is written letter from a lender stating the loan amount you qualify for, would be the first step. A credit check and some paperwork concerning your income and other finances will need to be completed, so have all your information ready.
A pre-approval along with the amount you have for a down payment, will determine the price range of houses you can afford. In todays market, most sellers wont even look at offers if the buyer doesnt have a preapproval
to back up the offer.
SEE ALSO: Home Equity Loans: The Ins And Outs
Defining Your Parameters
Make a list of what youre looking for in a home, including features that are must haves, like to haves, and maybe even your deal breakers. Keep in mind, this list is just a starting off point. Its rare to find a house that meets every one of your specifications,
but having it all laid out will help if you decide which houses to look at, and can help narrow down the field if youre comparing two or more houses.
Finding A Home
Now that you have a good idea of what you are looking for and what you can afford, you can finally start looking at houses. Search online, in newspapers, and in classified ads for homes that are currently on the market. Your real estate agent will also be a key asset at this stage, showing you houses that fit the parameters you laid out on your list.
When you find a home you want to check out in person, schedule an appointment with your agent to see it. Visit as many homes as you need;
sooner or later you will find the property of your dreams.
Do Some Research
As soon as you do find your dream home, take some time to find out a little more about it before you put in an offer.
It may look perfect on the surface, but you never know what could be lurking in the background. Ask some of the neighbors about the house, the previous owners, and the neighborhood in general.
You should also do some research on the area, as well as the city.
Find out the school ratings, the crime statistics, and any other information that might influence your purchasing decision. Say youve found the perfect house in a quiet neighborhood, and are ready to put in an offer, for example. However, a bit of online research reveals the city is planning to build a hospital right down the street. The house might not seem so perfect anymore with years of construction noise and traffic, followed by ambulances blaring at all hours of the night.
SEE ALSO: 7 Questions You Must Ask Neighbors Before You Buy
Putting In An Offer
Your real estate agent should be able to guide you when it comes to putting in an offer for a house. Their knowledge in the market will help you figure out if the asking price is fair, but its ultimately up to you to decide how much to offer. Ideally, youll want to go as low as possible without insulting the sellers;
this way theyll be open for negotiations and you can come to an eventual agreement.
However, if youre buying in a sellers market and there are already multiple bids on the house, it would be smarter to get as close to the max amount youre willing to pay. Bidding wars can be a nightmare, with people paying tens of thousands more than asking. If you need to, talk to your real estate agent for some tips or advice, but remember, dont put in more than you can afford or are comfortable spending.
Sure you might win the house, but how long will you be able to pay for it?
Perform Inspections And Walkthroughs
An inspection is a careful visual examination of the property, evaluating major structural elements and systems of the home. This includes:
Inspections should always be done on a house to determine its condition and if any repairs need to be made before purchase.
- Air conditioning
If a seller hasnt already conducted an inspection before listing, the buyer can have one done either before or after putting in a bid. The cost of any needed repairs, replacements, or updates that are revealed through the inspection can then be negotiated from the homes price. Its best to find a good inspector through referrals, so ask your real estate agent or any friends or family for dependable recommendations.
A walkthrough, which is similar to an inspection, usually takes place right before closing, and is your last chance to check over the house one more time before the deal goes through.
Try not to focus too much on furniture configuration and paint colors though. Pay more attention to whether repairs have been made after the inspection and that everything else, like the plumbing and electricity, is in good working order. This is especially crucial if the house has been left vacant for a long period of time.
Closing On Your Dream Home
Once youve finished your final walkthrough and youve found that everything checks out, its finally time for closing. Youll need to look over and sign a huge stack of paperwork and legal documents, including a closing statement, which itemizes the fees, charges, and payments of your real estate transaction, and the deed and title to the house, which transfers legal ownership of the property to you.
The temptation to just sign everything in order to get to the end sooner might be strong, but you should look over the documents carefully, and if everything looks good, go ahead and sign it.
Once thats done, youve just bought your first home. Congratulations!
Dont Spend All Your Money
Before you start splurging on new furniture and updated kitchen, however, you might want to think about saving some money for the future.
Inspections are great for catching a propertys obvious repairs, but you never know what might happen when you start living there. The air conditioner might break down that summer, for instance, or a pipe might freeze during the winter. Unexpected expenses pop up all the time,
so it would be smart to have some money set aside in case of an emergency.
Maintain Your Home
After spending so much time and money on your new home, make sure you put in the effort to keep it regular maintained.
Not only will this save you money on repairs by fixing issues before they can become problems; it also helps with resale value. Yes, youve just moved in and should be enjoying your home to the fullest, but its always smart to keep your homes value in mind. Your house is also your investment, so make sure to take excellent care of it.