7 Tips for First-Time Home Buyers
Buying your first home is likely one of the most memorable events of your adult life. You have scrimped and saved and now it’s finally time to buy. But what should you expect when you actually go through the process? Like many other rites of passage, your expectations of what may happen could be a little different than the reality. To prepare you for your first-time home buying experience, here are some tips to keep in mind.
1. Really understand the finances
First-time buyers are excited about looking for homes and don’t often take enough time to understand all the financial aspects of buying a home. You should understand exactly how much you can afford before you fall in love with a home, so that you know whether you will be able to purchase it.
According to Ross Armstrong, a real estate agent in Newport Beach, “buyers will start the process at the ‘viewing property’ stage instead of first getting the financials in place. A dream home can be found in the perfect location after weeks/months of searching, only to find out that home on that street is way out of your price range. I try to get all my clients to have the financial discussion ASAP.”
2. See the potential in each home
Everyone wants their dream home, but let’s be honest—not all of us can afford each and every item on our wish lists. It’s crucial to be flexible when looking for a home for the first time. Chances are that it’s not going to tick every item on your box, but you can try to get as close as possible.
This is why it’s important to be able to see the true potential in a space. Do you detest those bright orange walls? While the walls may be eyesores now, it’s nothing that a couple of coats of paint won’t fix. Do you hate the wood paneling? Figure out how to tear it down or just embrace it by decorating in a cabin-like style. The point is to not write off a home because of little flaws that can be easily fixed—especially if it’s in your price range.
3. Pick an agent who will teach and guide you
As a buyer, one of your most valuable tools in your toolbox is your real estate agent. This is the person you will go to for advice and the person that you will be emailing online listings to nonstop. Your real estate agent is someone you will be relying on for expert knowledge, which is why you should be sure to pick someone who can guide you through this experience in a way that educates you.
“Most first time buyers think the process will take a few weeks and their buying power is considerably more than it actually is. I always stress the importance of a great agent who adds value and explains the process rather than merely opening doors and collecting a commission check. In my experience, the agent is key to making sure the buyers move through the entire process as smoothly as possible,” Armstrong says.
4. Hire a good home inspector
In addition to your real estate agent, your home inspector is one of the biggest assets throughout the home-buying process. This is especially true if you are interested in buying a “fixer-upper,” which is a lower-priced home that needs a lot of high-cost repairs or remodeling to fix it up.
A home inspector is going to give you an unbiased opinion on how much deferred maintenance repair work (if any) the home requires and what it might cost to address. You can use this information to decrease your bid on a home or simply to prepare for how much you may need to spend once the house is yours.
5. Do your research and get organized
Though your real estate agent will undoubtedly be crucial in guiding you through the home purchase process, be sure that you are also doing your homework. Before you go to meet with the agent, familiarize yourself with basic knowledge about common real estate terms, how a mortgage works, what a lender looks for, etc. — and have all of your financial documents in order. You don’t want to walk in completely unprepared when you talk to the real estate agent.
“Do as much home research as possible prior to engaging an agent. Use the agent for referrals. Have your credit organized and your financials on hand so the lender can review them quickly,” Armstrong says. “I work closely with the lender on all my deals and there has to be good communication between both agents and lender to make sure loan contingency removal does not become an issue.”
6. Living in a large city often means sacrificing space
It’s no secret that living in a metropolitan area can get expensive. Everything from food to real estate can be priced significantly higher than in the suburbs or rural areas. When you are purchasing in a large city, you will most likely not have the amount of space that you envisioned in your first home.
However, city living has its advantages. While you may not have guest rooms or a spacious kitchen, you will probably be close to high quality entertainment and dining options. Some people even view a smaller living space as a positive because it prevents them from accumulating a lot of things they don’t need. Of course, if you find that you need more space for your kids (or yourself), then you might consider moving outside the city to get a little more bang for your buck.
7. Make sure you have enough of a down payment
Whether you are buying a house for the first time or not, the amount of your down payment will be a big determinant of how much home you can afford. If you find that many of the homes in your area are out of reach without a higher down payment, or if you want to reserve cash for other investments, you should check out the Unison HomeBuyer program from Unison.
Buying a home for the first time is a challenging and exciting time. Just be sure to do your research and learn as much about the process as you can, so you can tackle everything proactively and feel confident throughout your home search. Before you know it you’ll be moving into your new home.