Congratulations! You’re ready to buy your first home. If you’re like most first-time homebuyers, it’s a very exciting time. But, since it’s something you haven’t done before, you need to make sure that you research the process, find out what to expect and what you can do to make the experience a success. Here are the most critical things a first-time home-buyer needs to know to get started.
Okay, so you’re fired up about buying a house, but don’t forget that there are other things you like to (and have to) spend your money. It’s easy to get caught up in the magic of house-hunting and end up paying more than you’re comfortable with. Just because you’re approved for a particular mortgage amount doesn’t mean you should use all the approved funds to buy your home.
You need to do the math. The cost of home ownership goes far beyond the mortgage payment. Make sure that you add in:
- Property Taxes and Home Insurance: These two items are often included in your monthly mortgage payment, but keep in mind that many online mortgage calculators don’t take these into account.
- Private Mortgage Insurance (PMI): If your down payment is less than 20 percent, you may need to include Private Mortgage Insurance (PMI) in your monthly mortgage cost.
- Homeowner Association (HOA) Fees: If you move into a neighborhood that has an HOA, you’ll need to factor in a monthly HOA fee.
- Utilities: Your utilities may be higher in your new home, so don’t underestimate the cost.
- Maintenance: Even newer homes need occasional maintenance, so make sure to consider maintenance in your budget.
Based on the potential cost of a new home, decide what you’re willing to spend on this alone, each month. Your calculations may indicate that if you buy the most expensive home you can... you won’t have enough money each month to do the other things you enjoy doing. If that’s the case, set a price range for your new home that will let you have that desirable lifestyle that you also yearn for.
You’ll need the services of a number of professionals as you go through the purchase process, but you need to start with these two.
- A Real Estate Agent: Find an agent that has experience working with first-time homebuyers. Choose wisely, and they can be a big help in ensuring that you enjoy your home buying experience. Hiring a relative or friend who just got their license, or who isn’t familiar with the neighborhoods you want to look in may not be the best approach.
- A Mortgage Lender: Don’t delay finding a mortgage lender. You need to get pre-approved before you even start looking for a home. You’ll get a clear idea of what your mortgage costs will be, and you’ll put yourself in a strong negotiating position with home sellers.
Realistically, you’ll never find a perfect house, so it’s important to make a list of things you need and things you want. The things you need should be those things that you don’t want to compromise on, while the things you want aren’t set in stone. You might even want to prioritize your “need” list. These lists will help you stay focused as you’re looking at prospective homes. For example, you may want a wrap-around porch, but you need to be in a particular school district. Review and revise the list with your real estate agent.
There are other things you’ll need to know as you get farther into your home search. However, when you address the issues described above, you’ve set a good foundation for success! Remember to go in prepared but to make it a fun experience. Being ready to jump if you need to doesn’t have to mean a stressful experience.
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