Jumping into home ownership for the first time is exciting, but we know it can be equally overwhelming. We hope to eliminate any worries you might have and provide some tools and resources to make the process go smoothly. Below are some tips we have for first-time home buyers.
1. DETERMINE A SOLID BUDGET
The home buying process starts with setting a budget and creating a foundation of expectations at your determined price point. It is easy to over extend yourself or be tempted to make an impulsive purchase but doing either of these can have an impact on your financial future. So, how much house can you afford? There are really two key components to answering this question.
2. DON’T FORGET ABOUT CLOSING COSTS
This tip is closely related to the first, but we found it important enough to stand alone. When determining a budget and your cost for a down payment, do not forget to factor in closing costs as well. On top of whatever amount is allocated as the down payment, you may also incur the cost of an appraisal, inspection, credit report, title insurance, taxes, home insurance, property survey, and other fees associated with the real estate transaction. These expenses will mostly be added to the lump sum paid at closing, but a few of these may require payment prior to closing. These costs fluctuate, but a general calculation is to add 3-4 percent of the purchase price of the home to what your down payment will be.
FOR EXAMPLE: If you are purchasing a home at $200,000 with a 20 percent down payment, the cash to close amount will roughly be $40,000 (20 percent of $200,000) + $8,000 (4 percent of $200,000) = $48,000.
3. USE A REALTOR AND LEVERAGE THEIR RESOURCES
Zillow and Realtor.com have revolutionized access to the real estate market, but as great as services like these are, there is still no replacement for a seasoned and knowledgeable real estate agent. Not only are they experts in navigating the entire real estate transaction, but they have skills and resources that are proven to help those buying and selling homes. They are master negotiators, have access to a network of clients and other real estate professionals, can give you a realistic evaluation on home values and typically make buying a home 50 percent faster than those who are flying solo.
4. MAKE YOUR OFFER MORE PERSONABLE
Home buying has always been this sterile exchange that typically involves several third-parties. Making this process more personal can make all the difference in getting an offer accepted versus being overlooked, especially in a competitive market or multiple-offer situation. Submit a letter and photo of your family along with your offer. Giving the seller a glimpse of who you are can help build a stronger connection between you and the seller.
5. BE PREPARED, HOME OWNERSHIP IS EMOTIONAL
There will be ups and there will be downs that will extend well after closing, but in the end, it is well worth it. You may find yourself terminating the contract to your dream home over an inspection report or having to repair hail damage months after moving in, but it’s the memories, the neighbors, the time you spend there that make home ownership so beautiful. Be prepared and enjoy the journey!
The information provided is given as a resource and is deemed reliable but not guaranteed.