Buying your first home can be very exciting and overwhelming at the same time. However, keep in mind that this should not be treated as an impossible task; people have been buying and selling houses for hundreds of years and nowadays certain realtors have the ability to offer incentives/deals to first time home buyers.
This article discusses all the necessary steps to take as well as the potential risks to avoid for first time home buyers!
How To Ensure a Smooth Process & Avoid Wasting Unnecessary Money
Being a first-time homeowner is one of the greatest and most rewarding things that can happen in your life. Who would not feel fulfilled by the luxury and prestige that comes with living in a home that you own?
Understandably, there are high chances that you will get overwhelmed by this experience. Imagine seeing homes being bought at prices as high as $400,000 or above, and available homes getting sold in a couple of days. Where do you fit into this market?
With such mind-blowing trends, you could be tempted to make an impulsive buy that could negatively affect your financial goals and have you paying off mortgages into your old age. Everyone wants to buy a home that they love and that does not affect their future financial goals.
These steps below will lead you to the right path to finding the best home at a reasonable price[i]. Adhere to these steps so that your first home is a blessing, not a burden
1. Pay off all your debts and develop an emergency fund
2. Figure out your budget
3. Save for the down payment and closing costs
4. Identify at least three potential lenders and get their quotes
5. Get loan pre-approval
6. Find a good real estate agent
7. Shop for your new home – choose a home that suits your needs and is within your budget
8. Make an offer
9. Negotiate closing costs
10. Get a home inspector
11. Get homeowners insurance
12. Seal the deal
Tips and Reminders for New Home Owners
Your first home is, without a doubt, a huge purchase. Perhaps this could be the biggest buy that you will have ever made up to this stage of your life. For this reason, you do not want to take unnecessary risks. If there are any risks involved, then they must be well calculated. Keep the following tips in mind during the buying process:
a) According to the law, to qualify as a first-time homeowner, you should not have owned a principal residence for three years[ii].
b) You can qualify to be a first-time home buyer if you have owned a property that was not in compliance with applicable building codes.
c) Find first-time homebuyer assistance programs[iii] – these programs combine low interest-rate mortgages, tax credits, down payment assistance, and closing cost assistance.
d) Get a professional home inspector – a good home inspector will make a thorough assessment of the property and mechanical systems, identifying potential problems to help you make an informed buying decision.
e) Find an experienced real estate professional who understands the area and market – your realtor has the potential to make or break your home purchasing experience.
f) Draining your savings – most first-time homebuyers spend all or most of their savings on the down payment or closing costs. This is a huge mistake to make.
g) Ensure to calculate the hidden costs of homeownership – being a new homeowner involves several other potential expenses such as property taxes, homeowner’s insurance, mortgage insurance, repairs, hazard insurance, maintenance, and utilities, etc.
h) Negotiate a homebuyer rebate – homebuyer rebates, or commission rebates are not known to most first-time homebuyers. This is basically a rebate of a percentage of the home’s sales price that should come out of the agent’s commission.
i) Start saving early, draw up a hard budget and stick to it
j) Make a list of non-negotiables – your lifestyle and values, home features, location, amenities, etc.
The Bottom Line
Perhaps this is your first time buying a home, and this is why you are here reading about first time home buyers. If you want to avoid regrets, you should do extensive research about homes and all that comes with owning a home.
It would work best if you engaged a real estate professional who will take the weight off your back and help you find the best home for you[iv]. They will also assist in negotiations and seeing the process through until closure. This way, you will also reduce the chances of getting scammed by the notorious online scammers who have flooded almost every industry in the recent past.
[i] Cruze, R. (n.d.). Tips for First-Time Home Buyers. Retrieved December 04, 2020, from https://www.daveramsey.com/blog/tips-for-first-time-home-buyers
[ii] Fontinelle, A. (2020, September 18). First-Time Homebuyer’s Guide. Retrieved December 04, 2020, from https://www.investopedia.com/updates/first-time-home-buyer/
[iii] Wichter, Z. (n.d.). First-Time Homebuyer Loans And Programs. Retrieved December 04, 2020, from https://www.bankrate.com/mortgages/first-time-homebuyer-loans-and-programs/
[iv] Sun, C. (2016, March 04). 5 Tips for First-Time Home Buyers. Retrieved December 04, 2020, from https://www.entrepreneur.com/article/271836