Buying your first home is an immense and significant decision, and a very exciting experience!
Without the proper guidance, commencing the journey towards becoming a first-time home buyer can be stressful and overwhelming.
There are a few things to keep in mind along the way to prepare you for the process.
1. Establish a Budget
Before you begin browsing for homes, it is imperative to determine what your price range is.
Owning a home is more expensive than renting, since as a homeowner, you will be responsible for any maintenance and upkeep costs of your property. The first step to creating a house budget is to clarify what you can afford.
To start this process, you can use an online mortgage calculator which will calculate the maximum monthly payment you can afford, based on the overall price of the home and factoring in a down payment over a 30-year-mortgage.
You may also want to speak to your local real estate agent and a few insurance companies to get an idea of property tax rates and homeowners insurance costs, since these factors vary.
2. Create a List of Your Non-Negotiables
It can be challenging to find the “perfect” property that checks all your boxes. The best way to narrow down your non-negotiable features is to make a list. Consider your lifestyle. What is your ideal location? How many individuals will be living in the home with you, if any? Will pets be accompanying you? Do you need a yard? A garage? Central air conditioning?
There is a difference between your “must-haves” and your “nice-to-haves”. Make sure you determine them before you begin shopping for your first home.
We suggest visiting open houses in your areas of interest, and gauging options from there, so you have a sense of what exists in that local market.
3. Work with an Experienced Local Realtor
Working with the right realtor can make or break your first home buying experience, or any for that matter. No one knows the local area and local market like a well-known and established local realtor. They will serve as your guide and expert along this journey and save an enormous amount of time throughout the home buying process.
Local realtors often know about homes that are not yet listed on the market, and having an insider’s tip can be beneficial once you’ve established your list of non-negotiables. Ask your realtor about building a listing cart that caters to your interests and “must-have” features.
Don’t know any local realtors in the area you are interested in? Start by asking family, friends, or co-workers who they worked with when purchasing or selling their home. The National Association of Realtors shares that 71% of first-time home buyers found their real estate agent through means of a personal referral.
What if you are relocating to a new area, and don’t have any family, friends, or co-workers in that area or neighborhood? Research realtors on social media platforms to get a feel for the agents available to you. Check out agency Facebook pages and scroll through posts to see how they interact with customers and read reviews clients have left. Social media can be your best avenue to use for research!
4. Save for a Down Payment & Closing Costs
When purchasing your first home, it is important to save the proper amount for both a down payment, and for closing costs. Don’t forget to factor these into your budget when you are calculating your price range and the amount you can afford to spend on your home.
The suggested “rule of thumb” is to save 3% to 6% of the price of the home. Given that range, it's a wise idea to start with 2%-2.5% of the total cost of the home, in savings, to account for closing costs.
What are closing costs, you may wonder? These fees typically pay for important steps in the home-buying process, such as:
- Home inspection
- Credit report
- Homeowner’s insurance
5. Pre-Qualify for a Home Loan
Once you have set money aside for a down payment and closing costs, it’s time to get pre-qualified for a home loan. Take the extra step in requesting a pre-approval letter from the bank, as this shows sellers and realtors that you are a serious buyer.
Getting pre-qualified for a home loan can certainly give first-time homebuyers a competitive edge in the market. In order to pre-qualify, your bank or lender will need to verify your financial information, so have things like proof of income, paystubs, and tax information handy.
Interested in learning more to begin this pre-qualification process? Check out the Best Mortgage rates of 2019 to help determine which makes sense for your own financial situation.
6. Attend Open Houses
Once you’ve created your list of non-negotiables, and settled on a specific area, or neighborhood, attend a few open houses. Some of the homes may not be an ideal fit for what you are looking for, but open houses are a great way to learn more about the area, and the average price range of homes for sale.
Open houses are also an opportunity to meet local realtors. Don’t be afraid to ask questions and socialize with the agent hosting the open house. Chances are, they will be knowledgeable about the local neighborhood, crime rates, and school district and activities in the area.
Typically, open houses are staged by the real estate agency as well. Walking through a multitude of open houses is a chance to become privy to currently trends, designs and styles. These can provide excellent tips and suggestions for decorating your new home!
7. Request a Home Inspection
The best way to uncover any issues with your potential new home, is to get a home inspection.
Home inspectors will provide a professional report on the overall condition of your new property. The inspection on average lasts 3-4 hours, and the home inspector will bring a checklist of items to inspect, and a standardized format for providing you with the results. Your report will usually include extreme detail, and plenty of photos of both the inside and outside of your new home.
Interested in purchasing your first home? We would love to accompany you on this incredible and exciting journey! Reach out via call or text to Susie Bradley at 315-795-5101, or Will Bradley at 315-794-5103. We can’t wait to meet you!