Everything You Need to Consider Before Buying Your First Home
Maybe you’ve been living in a nice apartment for a decade, or maybe you’re just a few years out from college or a vocational program. Either way, you’re probably feeling the need for a real home. So how do you make it happen?
On the surface, the idea of buying a home seems pretty straightforward, but there are many important details to work out before you’re ready. These 30 tips and questions will help you get there in one piece.
Understand Why You Want to Buy a House
The very first thing to do before taking this giant leap is figuring out why it is you want to buy a home. Doing so will let you determine if you have the resources to realistically acquire a house you’d be happy with and understand what you need to look for moving forward.
Know Your Credit Score
Your credit score is plays a huge role in your ability to buy a home. A good score will help you save money through low-interest loan rates and make you more appealing as a potential homeowner and borrower overall.
Save Up for Your Down Payment
While much of your mortgage will likely be paid off in the future, you still need to save up a sizable amount for a downpayment on your first home. On the upside, the more you lay down yourself, the less you need to borrow from a bank.
Learn the Meaning Behind Those Fancy Real Estate Terms
There are tons of terms you’ll hear tossed around while you’re in the process of purchasing a house, and it’s important that you understand what they mean. While a good agent or trustworthy bank will often explain such terms if you ask, it’s best if you understand them before looking for a house — after all, not all agents and banks are looking out for your interests.
Get Pre-Approval for Your Home Loan Before You Start Shopping
Another financially important thing to do before looking for houses is to get your loan pre-approved. Pre-approval not only lets you know how much you can borrow from the bank, but it also lets sellers know that you can follow through on any offer you make.
Use a Trusted Realtor
As you begin your journey to a new home, it’s critical that you find a realtor that you trust. The best and easiest way to do that is to ask around among coworkers, family and friends that live in the approximate area to which you plan to move.
Remember That Buying a House Involves a Contract
Buying a house is all about contracts: ones with your bank, the seller of the house, and more. You’re signing important legal documents that will affect your life for years to come, so make sure you read the fine print.
Clearly Communicate Your Vision to Your Agent
For your real estate agent to truly help you find what you’re really looking for, it’s important to not only have established your own goals for a house, but also to clearly communicate them to your realtor. If there’s a particular type of home you love or despise, let that be known right off the bat.
Buy the Home You Need in The Near Future, Not Just Today
From kids to new jobs to lifestyle changes, odds are your needs and desires aren’t going to stay the same over the coming decade. And since you’re buying a house, not renting you want to make sure that you’re buying a home that will allow you to grow and change.
Have an Exit Plan if You’re Buying With a Non-Marital Partner
People have plenty of reasons for buying a house with someone they’re not married to, whether it’s objection to the institution, finances or something else. However, many laws concerning homeownership aren’t designed around people that aren’t married. This is particularly important when one owner of the house decides to leave the other.
Look Past the Paint Color
While looking for houses, it’s common to find that they’ve been decorated in weird ways — or at least, in ways you certainly wouldn’t have done. If all you have to judge a house on is sickly yellow walls, it can be tempting to rule it out.
Plan Ahead for Your Furniture
If you have furniture that you want to bring into your new home, you probably already have some idea of where each piece will go. However, if you’re planning to upgrade your furniture, you’ll want to start taking notes as you shop houses.
Don’t Do Anything to Change Your Financial Situation
Your pre-approval is founded on the information you provided when you made your application. That means any changes to your finances afterward could affect your entire situation. It might even cost you the house of your dreams.
Consider the Housing Market in Your Timing
One of the things that may help you decide when to buy a home is the housing market itself. If you purchase a home at the wrong time, you might regret it for many decades to come, depending on the loan you get.
Don’t Forget Past Debt as You Plan and Budget
Budgeting for the many expenses of homeownership — property taxes, extra utility bills, homeowners insurance and more — is certainly important. However, you also need to factor in existing expenses as well, especially past debt.
Don’t Fixate on the Price of the House
A lot of young buyers fixate on the specific price of the house they’re interested in. They get it in their heads that as long as they can afford it with their cost of living and the sticker price accounted for, they should be good to go.
Shop Around for the Right Mortgage
You’ve been pre-approved for your mortgage, which is great. However, that’s not where this loan journey ends. You need to shop around a bit to find the exact fit for your needs and your finances, as not all mortgages are created equally.
Don’t Buy a House You Cannot Afford
This may seem like common sense. but never buy a house you cannot afford. Unlike other situations where you spend too much money, buying a house that’s too expensive hurts you not just in the present, but well into the future, as mortgage payments leave you poor for a long time.
Know Every Single Expense Involved
One of the downsides to buying versus renting is the sheer amount of paperwork and number of expenses you need to handle. There are numerous fees and taxes that you should be prepared to include in your budget so as not to be surprised.
Don’t Worry About the Ugly Carpet
Like paint, if a home has everything you’re looking for except an ugly carpet that’s tacky, uncomfortable or just plain gross, you can probably change it without too much hassle. You can either pay someone to change the carpet or find some decently priced squares and replace it yourself.
Always Get a House Inspection Before Buying
It is important to have a house inspection before you purchase a property. If you’re getting a loan, the lender may even require you to get an inspection as part of your contract. A home inspection can help you better understand any structural or mechanical issues that are present.
Don’t Get Pressured Into Anything
It’s important not to allow yourself to be pressured into any sale. Not every agent has your best interests at heart, and some are not above trying to cause panic and anxiety to make a sale and earn their commission. Until you sign the paperwork, you are under no obligation to purchase a house, no matter how many properties you have been shown.
Consider Flooding Potential
Once you’ve found a house you like, determine whether or not it lies in a floodplain. The closer the house is to water, the greater the chance there may be flooding during storms. Even if the house isn't near water, the property itself may be prone to collecting it, especially in the basement.
Decide If Buying a Fixer-Upper Will Save You Money or Not
For some of us, the idea of a fixer-upper is a total thrill. You can buy a house that’s basically a shell and build it up from the floor, making it precisely what you want in practically every way — assuming the house has good bones.
Make Sure the Inspections Involve Checking For Asbestos, Mold and Radon
When you have the property inspected, make sure there are no traces of asbestos, radon or mold. Asbestos was a frequently used building material up until 1977, and this cancerous material can cause the cost of repairs to skyrocket while destroying the resale value.
Don’t Settle for the First House You Like
While it can be tempting to settle for the first house whose picture you love, it’s important to see the house in person and scout out what the neighborhood is like. Make sure you have a priority list of qualities that you need in a house and the surrounding neighborhood.
Remember to Negotiate Repairs
As noted previously, you’ll probably need and want a home inspection. If it reveals a need for any repairs, speak with the agent who is brokering the deal. Depending on the repairs needed on the property, it’s possible to get the repairs thrown into your contract with the seller.
Understand the Homeowners Association
Before purchasing a house, you should determine if the property is governed by a homeowners association. Not all houses are part one, but some are, and they can vary wildly in their implications for you, so it’s important to know what you are getting into.
Make the Right Offer on the House You Love
An important step to getting the house of your dreams is making an offer the seller accepts. After finding the right place, your agent can help prepare the offer package. This package should include your offer, proof of funds, a copy of your pre-approval letter, terms and ideally a personal letter.