Buying your first home is exciting yet stressful at the same time. There’s a lot of thought that goes into buying a home. You need to manage your finances and your time, as well as make big decisions as to where you want to settle down.
Your feelings of excitement that comes with buying a new home can easily turn into stress and frustration, which is why you need to have a clear idea of the home buying process. If you’ve just started searching for your forever home, here are some tips you should keep in mind.
- Know your budget and stick to it.
Before anything else, you need to know how much you’re willing to work with. Your budget depends on different factors: how much money you have in the bank; how much you want to spend; and how much you want to take out as a loan. You also need to consider how much money you need to furnish or repair your newly purchased home.
It’s better to hire an expert to help you estimate your budget. You can look for financial advisors, mortgage brokers, or other professionals that can help you create a budget that fits your financial status and future goals.
- Make sure to include closing costs.
There are other costs associated with buying a house – aside from the upfront cost of your potential home. Make sure to take into consideration the commission fees (if the seller doesn’t cover it), title fees homeowners insurance, taxes, mortgage insurance, underwriting fees, attorney fees, and more. These fees can go up to $10,000 to $20,000. If you’re a first-time homebuyer, you can’t leverage on the money you made from a previous property sale. You’d have to save up for it or take out a loan.
- Don’t go with the first mortgage offered to you.
When it comes to landing on the right mortgage, you have to compare your options. Rates usually vary from lender to lender. If you’re not sure where to start or what to do, you can work with a mortgage broker. However, you need to pay them 1% to 2% of the total loan rate when you close the deal.
- Stop any activity that can negatively impact your credit.
Did you know that your personal credit plays a huge role in determining the terms and interest rates of your mortgage? Once you’ve figured out your credit score, make sure not to do anything that can negatively affect it, such as taking out another loan, refinancing existing loans, or opening a new credit card. Instead, take proactive steps that can improve your credit score like paying down loans or debt.
- Work with a realtor you like.
There’s nothing wrong with searching for potential homes without a realtor. However, it helps to work with a realtor once you find a house you like. A local realtor can help first-time buyers understand the home-buying process, including trends and comps, negotiations, and real estate jargons that can be confusing to buyers.
Additionally, a reputable realtor will schedule open houses for you and help you connect with an attorney and home inspector once you’ve found your dream home. Above all else, make sure you’re working with a realtor could get along with. Do your research, ask for referrals, and read reviews so you’d find the best realtor for you.
- Know your deal breakers.
I’m sure you already have an idea on what your future home would look like. But do you know what you don’t want in a home? While it pays to have an open mind, you probably have an idea of what you can’t overlook. Maybe you don’t want to live miles away from your workplace or renovate an entire house – whatever it is, acknowledging your deal breakers help narrow down your search.
- Look past tacky interior design.
Unless you’re buying newly constructed houses, there’s a huge chance that you’re going to have to renovate something in all the potential properties you look at. While purple kitchens, dated window treatments, and tacky carpeting may be hard to look at, you can easily have it renovated. Bad decorating shouldn’t get in the way of buying a home. A house with a strong foundation is definitely worth the effort.
- Negotiations are part of the home-buying process.
When buying a house, you have to negotiate. The back and forth interactions between buyer and seller are usually way out of a first-time buyer’s comfort zone. You might find it weird to ask a seller to bring down their asking price to a certain amount or ask them to repair something. However, it’s all part of buying a home.
Both parties are expected to compromise at some point. Keep in mind that you’re never going to get what you want unless you ask. Fortunately, if you hired a realtor, they’ll be the one to negotiate on your behalf. They are the ones who directly communicate with the seller and if they’ve done their job right, you wouldn’t have to speak with the seller yourself.
- Think of the future.
When buying a home, you’re not just renting an apartment, where you tap out in a year or two. Buying a home means you’re going to live then for half a decade or more. For this reason, you have to take into consideration your current and future needs when you’re out searching for homes.
Are you planning to start a family in the near future? Make sure to buy a house with an extra bedroom and relaxing spaces like hot tub enclosures and spas. Are you going to adopt a dog? You might want to go for a house with a yard. While your current needs are important, make sure you envision your future in your home.
Here’s something homebuyers don’t want to hear – you will never find a ‘perfect’ house. Even if you think you’ve found ‘the one’, you’ll most likely encounter problems along the way – rude neighbors, ant problems, and whatnot. Instead of looking for the ‘perfect’ home, choose the place that makes you (and your finances) happy.