First time home buyer September 26, 2022

What You Need to Know as a First-Time Homebuyer

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Buying your first home can be as exciting as it is confusing. There are many details to comb over, steps involved, and information to soak up. What should someone new to homebuying know before they start shopping? Here are some home buying tips to help keep you confident and prepared throughout the process.

Think Critically About Finances
Having a nest egg ready for expected costs like down payments and closing costs is essential. But many newbie homebuyers don’t consider other costs like inspections, moving costs, and other unexpected expenses that could pop up without warning. Take time to develop a budget for home buying expenses, not just buying the home itself.

It would help to think about your current debt when considering a new mortgage payment. Shopping around for rates will help, but handling things like credit cards and student loans before you start house hunting will make handling the new monthly payments significantly less stressful. Plus, with a better credit score, you’ll likely have a much lower interest rate on your mortgage. Knowing the state of your credit before you search gives you time to improve your credit score for multiple benefits.

Preparation is Key
If your finances have checked out, it’s time to get an excellent real estate agent in your ring. A talented real estate agent will listen to you and advocate for you to find what you want. Your real estate agent will guide you through the process of what’s needed right from the start. They can recommend reputable lenders so you can find our how much you can afford. Without a price threshold, you might waste time touring homes well outside your price range.

And don’t forget to get preapproved for a mortgage before starting. Preapproval can help you gauge what you can afford based on how much you can borrow. Preapproval also shows real estate professionals that you’re serious rather than “window shopping.” If you find the perfect home, chances are you will need to move quickly with submitting an offer, including providing a preapproval letter.

Know What You’re Looking For
When you first meet with your agent, you should know what you’re looking for and have it ready to share the details. The more specific you are, the better. Here are a few features that come up in conversation to help jog your brainstorming session:

What kind of home would you like? A condo? Duplex? Single-family home?
Are there any amenities you’d like? Pool? Tennis courts? Golf community? Lawn maintenance?
Where do you want to live? How flexible are you about the neighborhood?
How soon are you looking to move? Is the move date flexible?
What about the finer points like walkability, parking, taxes, and school districts?
Come up with answers to questions like these first, so you aren’t caught off-guard when the agent asks them.

You should also plan to devise a list of non-negotiables. Anything on this list is terms or items that you’ve deemed “must-haves” to purchase a home. Take your time with this and think hard about what you feel you couldn’t live without; this will be different for every homeowner.

Remember that your list could impact the price in either direction – if living near a top-rated school is vital to you, your home price will be higher. But if amenities don’t matter much to you, you could find that the price balances out.

Keeping an open mind is also key to a positive outcome. Depending on the area, your price point, and other factors, you may not get 100% of what’s on your list. It’s important to consider what can be changed after moving in. For example, proximity to the train station is more important than having an updated kitchen. You can renovate your kitchen, but you won’t be able to move the property closer to the train.

Start Your Search
Following these first time homebuying tips will give you the building blocks for a solid, stress-free home-buying experience. Once you have a good command of your finances and the tools you need to succeed, you’re ready to negotiate for what you need and start putting down offers for your dream home!