5 Essential Things Every First Time Buyer Should Do
Buying your first home is exciting! Even so, smart homebuyers take time to consider these five essential steps for achieving the best results.
1. Don’t fall in love with a house.
When shopping for your first home, it’s fine to think one house is great, but also consider several others that meet your needs and fall in your price range. Determine, as objectively as possible, which home would be best now—and in the future.
“Falling” for a house means you are putting yourself at a negotiating disadvantage and may overlook defects and issues. Until you move in, consider the house a “tool” for living. There’s plenty of time to fall in love later.
2. Buy with resale in mind.
When you purchase your first house, you probably think you will never want to leave it. Most people don’t think of their first home as a financial “stepping stone,” but it usually is.
Make sure you are buying in an area that is increasing, not decreasing, in value. Look for proximity to parks, shopping, and other perks that will improve the home’s resale value.
Also, be cautious about buying a home that is overbuilt for the neighborhood. If it’s the biggest, most expensive property on the block, it may be harder to get your desired resale price compared to a home that is closer to the middle in size and cost.
3. Budget for the cost of repairs.
If you find the home you want, but repairs are discovered during the negotiation process (like the air conditioner isn’t working properly, or the roof has a small leak, or the pipes under the kitchen sink routinely freeze in the winter), you may be tempted to move forward anyway.
If, however, you are buying a house that is stretching your monthly budget for a mortgage payment, these repairs can become a huge burden. If you want the house, even with necessary repairs, negotiate to have those items fixed by the seller, or to reduce the selling price by the amount of the needed repairs.
4. Get your finances in order before you start looking.
Shopping for a house can be exhilarating, but if you don’t know your financial situation, it can also be disappointing.
Pull a credit report before talking to any potential lenders. Pay down your debt and keep some money in the bank. Find a lender and get pre-qualified for a loan or (better yet) get pre-approved for a loan.
This way, if there are any financial issues to resolve, you can do so in advance and potentially improve your negotiating position. Armed with this information, you will know how much you can afford and can begin looking!
5. Look into financial programs/incentives for first-time buyers.
If you are buying your first home, you may be able to obtain help from your local, state or federal government. Some programs provide down payment assistance whereas others offer more attractive financing options.
For example, FHA loans (mortgages insured by the Federal Housing Administration) make financing easier and more affordable, especially for people with less-than-stellar credit or smaller down payments.
A qualified buyer’s representative—a REALTOR® who has earned their Accredited Buyer’s Representative (ABR®) designation—can guide you through all the steps to purchase your first home, including finding assistance programs in your area. They’ll help you ask all the right questions, consider all your options, and point out the pros and cons of any house you are considering.