By: Luis Maqueira
Broker & Co-Founder | Aleph Realty Corp
Buying a home for the first time can be exciting, overwhelming and downright scary. There are tons of places to get a mortgage and just as many people trying to sell a home. Where should a person start???
The easy answer from the beginning. Now more than ever, as rents are rising many potential first time home buyers are looking at rent vs buying.
Find an Agent
Some people are under the impression that an agent who has listed a home for sale will work just as hard for the buyer. While this may be true in a few situations, the bottom line is that the listing agent is getting hire by the Owner. This means it is in their best interest to get the highest price possible for the Owner He was hire for that.
Talk to a few real estate agents and pick one to represent you in the purchase of a home. Make sure is a local agent for the area you are buying. Your agent will get a share of the commission from the owner; thus, you are not paying any extra for representation.
Get a Mortgage Pre-Approval
Getting pre-approved from a mortgage lender before looking at a single home is the best choice for any first time home buyer. The lender can review your credit history, verify your income and down payment funds, and give you a firm approval subject to an appraisal of a home. You need to know your budget and what monthly payment are you looking for is the key to know the value for you next home.
Make Decisions Rationally, Not Emotionally
Considering the average size of a home price, it is safe to say this will be on the largest purchases you make in your lifetime. That type of decision needs to be made with all the available facts, and not a ton of emotions.
- Does the home have enough space for your current needs and your future plans?
- Do you need a large yard for pets, outdoor entertaining, or hobbies?
- Do you prefer to be close to neighbors or tucked away with more privacy?
- Is the home plan conducive to your life and how you want to spend your relaxation time?
Learn the Process
There will be several things that are new to you. Like underwriting rules, appraisals, and inspections costs. The agent can explain to you about home showings, offers, counteroffers, appraisals, title research on the home and a list of other things that you will need to be familiar with in order to make the best decision. Take notes, ask questions and make sure you are comfortable before moving on in the process.
Do NOT Try to Save Money by Forgoing a Home Inspection
The place will likely be cleaned, and everything will appear to be in great working condition. However, a home inspection may uncover a few small, normal maintenance items. Or, the inspection could uncover a major problem like a roof leak that the homeowner was unaware of. Spend the extra money on the inspection so that you know exactly what you are getting.
A Down Payment is Usually $$$$$?
Several loans are designed for first time home buyers and have a much lower down payment requirement. Some locations even have down payment assistance programs. Usually, an experienced Agent will have relation with best local lenders. Depending on the loan you choose your down could be 3%, 5% or 10%.
You Will Need Some Money for the Purchase
Even if you are qualified for a low down payment loan, there will be many other items that have a price associated with them. For example, the appraisal, home inspection, and home insurance policy. Listen to your lender and make sure to have enough to cover the expected closing costs.
The First Home You Buy May or will Not Be Your Last Home
It is impossible to predict what will happen in our lives over the next 10+ years. Family situations may change or new job offers come along may invade your life and make drastic changes. This is why you should get a home that meets your current needs. If things change, you can always sell the home and look for a different property that matches your new circumstances. Don’t buy a home base on future needs. You will pay expenses today for the future needs.
It is Ok if you DON’T Have All the Answers
Some people get so overwhelmed by all the steps and information involved with a home purchase that they do nothing for fear of making a mistake. This is the wrong approach to take. Get advice from your real estate agent and your lender, make sure you understand what they are telling you.
Be Prepared to Make an Offer
The main reason for getting pre-approved for a mortgage is to give you the opportunity to act quickly if a home in your price range and matching your needs should suddenly come on the market. The best homes will have interest from multiple buyers. Being able to make an offer through your agent as soon as a home is available can really make a huge difference in whether or not you actually become a homeowner.
Expect the home will need repairs
I have yet to see a home that doesn’t have a dozen or more things that need addressing. Don’t fret over little things. Be more concerned about any major needed repairs and how they can be resolved. Expect that the seller will not issue you a credit for all of the repairs. Asking for a seller contribution is fair.
Summing Up First Time Home Buyer Tips
This article may seem rather lengthy, but it is meant to be a good resource for buying a home. Considering the amount of time that will be invested in reviewing homes and the number of years needed to pay off a mortgage, it makes sense to get as much solid information as possible.
Use this article as a guide and get out there and make your homeownership goals a reality.