You are in the market for your first home and are wondering what you should take into account. Buying a home is the largest investment of most people's lives - and its not always an easy process.
It is important to plan carefully before you buy your first home because mistakes will affect your finances for years to come and they can affect the future of your young family.
Never buy in a hurry because that is how people make mistakes. If you find yourself suddenly needing a place for you and your family to live you might be better off renting for a few months as you plan on buying your first home. Here is what you should take into account:
Figure out your needs and be modest. You will want to leave some wiggle room in your monthly budget for unforeseen circumstances. They always exist, so be prepared for them. In addition, when you first purchase a home, you will find that you will spend quite a bit of money within the first couple months of living there. Even a home in perfect condition will require purchases that many first time home-buyers don't budget for.
Although all first time home buyers don't go on a spending spree when buying a home, many purchase household items that they need to "finish out" their new abode.
Most people forget about items such as:
Plants and Planters
New Beds and Bedding
Many young people find themselves with huge mortgages because when they buy their first home they buy to impress. You are still young and your family is small so in reality you will not need a home with lots of bedrooms. Think about the debt and buy only what you can comfortably pay off every month. You can buy a second bigger home later as your family grows. Try to avoid ARMs and stick with a 30 year fixed mortgage.
Start saving early. Ordinarily lenders ask homeowners to put down 20% but in order to attract buyers some go as low as 3% or even 100% financing. You may be tempted to go with the latter but the truth is that the lower the down payment the higher the interest. If you save for a long time you will be able to go with a lender who will take 20%.
There are a ton of options when it comes to securing a mortgage. As a general rule, you will get your best rate if you have the ability to put 20% down. For most first time home buyers that is simply not applicable.
Many people are under the impression that all real estate websites display all of the homes for sale. Websites such as Zillow may not have all of the homes for sale in your area. Generally, only local real estate broker websites have ALL of the active homes for sale in any particular area. Look for the IDX logo on the listings. If you see that, then the homes you are looking at are directly from the MLS.
Find the right people to walk you through your first home purchase. Friends and family that have experienced buying a home can help you avoid some of the common pitfalls.
However, you should also find a reputable real estate agent to help you not only locate the ideal home but also go through the transaction. A professional agent will advise you on what steps you need to take and they can guide you through the paperwork - brace yourself because there will be lots of it.
Never sign a deal in haste no matter how good it looks. Some sellers tempt buyers to buy quickly by offering unbelievable terms. Unfortunately if it's too good to be true it probably is.
Your real estate agent will assist you in going through your home inspections. Make sure that you go through every aspect of your property inspection report.
Deeply review all of the details of your mortgage. You should take your time and read all documents to understand what you are getting into. In some instances, for the more complicated of transactions, do not be afraid to hire a real estate lawyer to look over all documents - it will cost you a bit of money but you will avoid a worse situation later.
Think about the long term maintenance of the property. If you don't want to do it yourself you should think of buying a condo or an apartment, but if you don't mind the responsibility you can buy a traditional family home.
In most instances, it is recommended to purchase a home warranty for your new home. If you have a good agent, they will usually work that into the deal and get the seller to pay for that on your behalf. Do not misinterpret exactly what a home warranty does - they generally will cover minor issues on appliances and other tangible issues with the home, but not larger investments such as a new roof.
Buying your first home can be an overwhelming process. Don't let it get you down. These tips should help you successfully buy your first home.