All You Need to Know About Buying Your First House
They say your home is one of the biggest expenses you’ll ever make in your life. Similarly, buying your home for the first time is one of the biggest decisions you’ll ever have to make. You need to do your research and make an informed decision because this is something that will have a huge impact on your finances in the long term.
This can be tricky because there are so many things to consider, including mortgage selection, home shopping, home purchasing, plus a dozen other preparations that need to be made. Fortunately, we have you covered. Read on to learn all you need to know about buying your first house.
Hire a Trusted Realtor
When buying a home for the first time, you need an expert who can guide you through the experience. A trusted realtor will help you with all you need to know about buying your first house, and this can make a huge difference in the final outcome. When you break down the benefits of working with a trusted realtor, one of them is that you’re more likely to get a better price. This allows you to make the most of your budget. An experienced real estate agent knows all the negotiation tactics to convince sellers to reduce the asking price. At the very least, they will make sure you pay a fair price based on the location and neighborhood your home is in. A realtor comes in handy throughout the homebuying experience.
When you first start your search, you need a quick way to narrow down your options. All you have to do is communicate your vision and other specifics, and your realtor will quickly match you with the right type of home. Realtors have access to multiple listing services, so you’ll have many options to choose from. Overall, relying on the expertise of your realtor means you can avoid many mistakes that first-time homebuyers make.
Choose a Suitable Neighborhood and Type of Home
When buying a home for the first time, it’s not always possible to find your dream home with everything just the way you like it. But this is generally fine because you can change different aspects of your home to suit your needs. Unfortunately, one thing that you can’t change about your home is the neighborhood it’s located in. So, before you consider the specifics you want in your dream home, think about what you want in your dream neighborhood. The most important factor to consider is the type of amenities. You need a neighborhood that closely matches your lifestyle. For most people, amenities like schools, public transportation, health services, and recreation options are a big deal.
Another important thing to consider is the type of home you’re looking for. Are you looking for a single-family home, apartment, townhome, condo, or something else? What are the pros and cons of each option? In addition, which options come with homeowners association fees? These are all important considerations you need to make as you figure out all you need to know about buying your first house. Be sure to check out the neighborhood thoroughly and evaluate its potential and the type of amenities it offers.
Work With a Reputable Attorney
You can also hire a real estate attorney when buying a home for the first time. Remember, as a first-time homebuyer. You’re making a significant decision that has long-term consequences, so you need to figure out all you need to know about buying your first house before signing any contracts. One of the best things you can do for yourself is to work with a reputable attorney. As you navigate the home buying process, one of the things that may come as a surprise is the amount of paperwork involved. Your real estate attorney will help you with drafting and reviewing contracts for various documents, such as sales contracts. HOA documents, appraisals, and home inspection reports.
Sometimes, interpreting and drafting these complex real estate contracts isn’t always easy. This is something your attorney can help you with. Moreover, they can also step in during negotiations which is something they have a lot of experience with. A real estate attorney can also help you with various other tasks, such as filing new deeds, performing a lien and title search, reviewing important contracts, and preparing closing documents. This will take the pressure off of you and give you more peace of mind.
Consider Your Long Term Needs
Even if you’re buying a home for the first time, you may be planning to keep your new home for a while with no thoughts of selling down the line. In that case, you need to consider whether your new home aligns with your long-term plans. If you’re a younger couple, a smaller apartment might be perfect for now, but if you plan to have kids in a couple of years, will there be enough space to fit your growing family? In addition, do the neighborhood amenities suit your changing lifestyle? Similarly, if you’re close to retirement, you may want to consider if this is the home you would like to retire in. One of the most important questions you should ask yourself is, Do I plan to live here in the next five or so years?
Generally, it’s best to purchase a home you plan to live in for at least five years, as this gives you the most bang for your buck. You may not be familiar with all you need to know about buying your first house, but it’s still important to include your long-term plans and needs in the future. Another important factor to consider is the number of people that will be staying in the household, currently and in the future. This will help you find the best home for you that accommodates your needs for years to come.
Factor in the Cost of Renovations
It’s rare to buy a home that doesn’t require any improvements after purchasing. Even if you don’t buy a fixer-upper, you’ll still need to make some renovations before you’re ready to move into your new home or call it your dream home. So, as part of all you need to know about buying your first house, you need to be familiar with common renovations that take place after buying a new home and how they will impact your budget. If you buy a home with an old roof, one of the first things you may have to do is contact your local roofing company. This is important because a roof that’s in good condition will protect your home from expensive water damage. You also want to make sure you have all the protection you need against harsh weather elements.
After getting the roof looked at, you should also consider other worthwhile remodeling projects, such as plumbing, painting, lighting, garage door replacement, and installation of spray foam insulation. It’s important to perform a thorough inspection of your home so that you know which renovations are essential to make your new home as comfortable as possible. If you’re going to need to renovate major systems, then this should be reflected in the home’s purchase price. Sometimes being willing to tackle home renovation projects can save you money since it means you can buy your home for less. However, be careful of renovation projects that end up being too expensive than anticipated since these can derail your finances.
Take in Account All the Associated Costs
The price tag on your home is one of the major costs you have to deal with when buying your home for the first time, but it’s not the only cost. Earlier, we also talked about renovation costs, and this is another significant cost you also have to factor in. For instance, if you’re planning a granite countertop replacement or installing custom kitchen cabinets, this is something you have to include in your budget. To avoid any nasty surprises that could ruin your budget, you also need to look at the bigger picture and consider all other costs that come with buying a home for the first time.
There are many other costs that come with owning a house, such as moving costs. Another major cost is the cost of furnishing your house, whether you need to pay for bedroom furniture or appliance installation. An even more important cost that should not be overlooked is the cost of home insurance. Other associated costs that come with purchasing a home include real estate taxes, closing fees, homeowner association fees, home inspection fees, and home maintenance. When it comes to all you need to know about buying your first house, factoring in all the related costs will help you know what to expect so you don’t go off-course, financially speaking.
Stay Within Your Budget
One of the most important personal finance rules that you have to observe when buying a house for the first time is to set a budget and stick to that budget. Otherwise, buying a house you can’t afford can wreak havoc on your finances, and this can be difficult to fix. Sure, you may have found your dream home, but if you can’t afford it, then it’s probably not a good idea to buy it. The temptation comes when your lender is willing to provide you with a bigger lump sum. However, keep in mind that this is borrowed money, and you have to pay it back at an interest rate. The last thing you want is to be struggling with high monthly payments for the next five or seven years.
This puts you at risk of foreclosure. So, as mentioned, you should set a homebuying budget that’s reasonable before you start shopping for the right home for you. When shopping for your home, you only then need to look at homes that fall within the dollar range specified in your budget. When setting your budget, one of the first things you need to calculate is your debt to income ratio. You can obtain this figure by dividing your monthly income by your monthly expenses to figure out how much room you have in your budget. The other thing you have to remember when it comes to all you need to know about buying your first house is that there are ongoing costs like home repairs, property taxes, and insurance that have to be factored in. Be prepared to make a down payment of at least 20%, as this is a common requirement.
Improve Your Credit Score Before Exploring Mortgage Options
Taking out a mortgage is often a necessary step when buying your home for the first time. However, before doing so, it’s often recommended to strengthen your credit score. This allows you to borrow more at a lower interest rate. In addition, a higher credit score makes it easier to qualify for a mortgage in the first place. The first step to boosting your credit score is to get free copies of your credit score from the major credit bureaus. Look for and fix any errors that may be contained in the credit reports. You should also pay down some of your debt, stick to your repayment schedule, and reduce your credit card balances by as much as possible.
However, don’t close your credit cards, as you want your credit mix to be as high as possible. If you give it enough time, your credit score should start moving in the right direction. At this point, you can also start exploring your mortgage options by considering factors such as eligibility requirements and the amount of down payment required for first-time homebuyers. Knowing how to boost your credit score and choose the right mortgage is part of all you need to know about buying your first house.
Homeownership is exciting, and as you embark on this path, this guide on all you need to know about buying your first house should come in handy. Hopefully, you should be able to get your dream home or the best deal you can find.