When buying your first home, there are a lot of unknowns and it is easy to get caught up in a situation you are not prepared for. Here are fifteen tips that will guide you to making smart decisions on the purchase of your first home.
The preapproval process for a home loan is an important step when buying a home as it will let you know how much you qualify for. However, it takes some time to get the needed documents organized and sent to the loan officer. So make sure the first step you take when buying a new home is getting preapproved. You don’t want to start looking for homes in the $450,000s when it turns out you only qualify for $410,000.
2. House Hunting
Here comes the fun part: searching for your new home. Best advice here, is try to not get overwhelmed. You are going to check out many properties, some you will love, others you will not. It’s very common to get excited about a home, place an offer and get outbid, especially in a booming market. Just remember the perfect home for you is out there, you just have to stay positive.
3. Homeowners Insurance
Once you find out what type of home you are going to be purchasing, whether it be single family, townhome or condo, you will need to start shopping for homeowners insurance. Insurance companies offer different type of homeowners insurance for different types of properties, which is why it is smart to start shopping around for the best rates after you know what type of home you will be purchasing.
4. Open House
If looking to buy a resale home, make sure you don’t visit the home only during the open house viewing. Open houses can be crowded and loud and can cause you to miss details like cracks in the wall or stains on the carpet, as well as traffic noise outside.
5. The Community
Make sure when you are looking for a home to buy, you check out the community as well. Are the neighbors loud? Does the community seem family-friendly? Is there a park nearby for the kids? Is there a grocery store close by? If you commute to work, do you have quick and easy access to the freeway? And remember a home’s appraisal is based on the surrounding homes. You will want to make sure the other homes in the neighborhood are well kept so you can count on your home appreciating in value over time.
6. Think Outside the Box
Let’s face it, if money was no object we all would have the home of our dreams. Unfortunately, that is not the case for many of us. Be willing to compromise. Don’t turn down to view a home just because the exterior is not what you were hoping for or the yard is smaller then what you hoped for. You may miss out on a great floor plan inside.
7. Ask Questions
No one is an expert the first time they do something, and the same thing goes for buying your first home. Don’t be afraid to ask your realtor or new home sales specialist any questions you may have. Chances are they have been asked the same question by a pervious buyer. There are no stupid questions when it comes to the biggest purchase of your life.
8. Warning Signs
In real estate, there is an unspoken rule that if a home has 3 unfixable flaws, a homebuyer should walk away. Say a home has airport noise, no street parking and is in a flood zone. DO NOT PURCHASE THIS HOME!
There is a reason why staged homes sell quicker and for more money. They highlight a home’s attributes. But, you can be missing out on a hidden gem if you bypass a home because the house is cluttered and un-staged. Look past a home’s furnishings and pay attention to the little details like molding, fixtures and floor plan.
10. Placing an Offer
When you find the home you have been looking for and are ready to place an offer, talk to your agent about the absolute max price you are willing to pay. Then place an offer below that value and include anything you want the seller to contribute towards escrow or in the sale of the home. For example, you can ask they include the refrigerator and washer dryer or that they pay for the inspection. This will give you negotiating power if they come back with a higher offer.
We all want to feel like the one walking away with the best deal. But you will save in the long run if you let the seller win. When you place your first offer ask for more than what you are expecting to get (see tip 10). That way, when the seller counters, you can take off some items you where demanding for in the first offer, but really never expected to get. That way it seems like you are willing to compromise, and that will make the seller less likely to come back again with another counter offer after you already negotiated to meet their demands.
Anything not attached permanently to the property like appliances, hot tubs and even potted trees are not fixtures and not included in the sale of the home. If you want any non-fixtures included in the sale of the home, make sure it is said so in the contract.
While a home inspection can be a financial burden, especially to a first time homebuyer, it’s an investment you do not want to pass up. You don’t want to purchase a home and find out a year later the foundation is cracking and the repair cost is a fortune. Instead, pay for the inspection and if any major damage comes up, you can ask the seller to lower the cost of the home accordingly.
14. Closing Costs
The cost of closing catches many first time homebuyers off guard. You will not only be responsible for the down payment, but you may have to pay prepaid interest, escrow fees and transfer tax fees. Ask your lender for a list of all the upfront cost you are required to pay.
Here is list of items needing to be accomplished for an easy move:
A) Start packing — it takes FOREVER (well it seems like that). Make sure to take your time and label each box with its items and what room it belongs in. Keep your clothes on the hangers to save both packing and unpacking time.
B) Book your mover.
C) Contact the post office to forward your mail to the new address.
a. Make sure when you receive the forwarded mail you contact the sender and give them your new address.
D) Give the DMV your new address.
E) Donate any food, clothes or furniture that you do not want to take with you to your new home.
Now go and conquer the American dream of home ownership!