Buying your first house can be an exciting and thrilling time. Take some extra time before your home search and educate yourself on loan types, down payment assistance programs, your buying power, and decide what features are most important in your new house. A little preparation upfront will undoubtedly make the process smoother and likely result in finding the house that best fits your needs. Do you need a basement, want a large lot, need a garage, and how many bedrooms and bathrooms does your family need to be comfortable in your next home? Talk to your real estate agent to set realistic expectations regarding your home search. Below is a list of suggestions that will help you eliminate tedious and costly mistakes during your next home search.
• Get Pre-Approved – Before you start looking for a new house, always make sure you have a fully underwritten pre-approval from a reputable mortgage lender. Lenders scrutinize credit, income (from commission, tips, bonuses, etc.), down payment sources, employment history, and the list goes on and on. A full pre-approval will not only let you know you’re exact buying power, loan type, required down-payment, but it will eliminate the stress of being denied after you find the house you want to purchase.
• Work with a Professional Buyer’s Agent – Talk to your family and friends and interview buyer’s agents to represent you in your home search. Make sure you are comfortable with them. Once you have found your agent, listen to their advice, and trust their opinions.
• Unrealistic Expectations – Understand what type of house you can afford with your buying power. Each real estate market is different. You may be able to afford a larger house, more land, or a newer property if you expand the area you are looking for your new home in.
• Cost of Homeownership – Before putting your offer in on a property, talk to your loan officer and have them calculate a complete payment with taxes, home owner’s insurance, and mortgage insurance. Is there a home owner association fee? Ask your real estate agent to provide copies of recent utility bills. Ask questions such as: would you have to pay for trash removal?
• Home Inspection – Always complete a private home inspection to protect yourself from large unexpected repairs. If any repairs are discovered during the home inspection, you can always try to negotiate the repairs with the seller or ask the seller to release you from the contract.
• Neighborhood – Research your neighborhood. Call the local police department and ask an officer if there has been any crime recently in the neighborhood. Talk to the neighbors. One of the worst things property owners face is not getting along with their neighbors.
• Appreciation – Although most houses appreciate over time, some do not. The mortgage melt-down that lasted from 2007 to 2013 saw severe depreciation in housing values across the United States. Also, some property due to location or housing type (condominiums) may generate little to no appreciation even in a normal housing market.
Arming yourself with knowledge will likely reduce stress, increase your confidence in the home buying process, and help you find a house that meets your needs. Remember, most people move multiple times during their lives. Therefore, the expectations for your first home should be as a stepping stone to your next house.