When buying your first home, you’re bound to experience many ‘’Oh wow, nobody told me this’’ moments — more than you could possibly hope for.
Buying your first home can be an incredibly challenging process. After all, there are so many factors to consider — the state of the housing market, type of sale, mortgages, and whatnot. Not to mention that you’re at risk of making a very expensive mistake.
But just like any big project, a successful home buying process is all about careful planning (and a bit of luck).
So in this article, we’ll discuss 7 ideas that will ensure your home buying process goes as smoothly as possible. Let’s begin!
Check your credit
As a first-time homebuyer, the first thing you need to do is learn what’s on your credit report. Because when you apply for a mortgage, lenders review your credit reports to evaluate your payment habits, balances, and overall financial health.
Your credit score and reports will help determine what interest rate you’re eligible for. And the higher your credit score is, the better the interest rate on your mortgage.
If you want to get the best rate possible, you need to review your credit reports regularly and adjust your habits accordingly. Here are some tips to help you achieve that.
Set a budget
When buying your first home, you must set a realistic budget. For starters, you should review your finances carefully — including your monthly income, savings, and debts — and get a feel for how much you can afford to spend on a house.
You should also factor in the cost of home maintenance and emergency savings for repair, for example. Keep in mind that you might need to set aside more if the home you’ve set your eyes upon is older, bigger, or comes with high-maintenance amenities, such as a pool.
On top of your household expenses, consider other financial obligations that lenders won’t see on your credit reports, including grocery, utility, cell phone, and car insurance.
If you’re unsure about the budget, check out this guide on how much you need upfront as a new homebuyer.
Settle your current debts
You should always deal with your existing debts before buying a home. Because the amount of existing debt you carry has an enormous impact on how much money you’re able to dedicate to your down payment.
And besides the down payment, you need to factor in closing costs and other urgent move-in expenses such as urgent home repairs. As a first-time homebuyer, it’s important to live within your budget and not be burdened by too many additional debts.
Carry out a thorough home inspection
In some states, you can conduct a home inspection before making a purchase offer. But in others, it’s a contract contingency. Meaning that you have the right to cancel the contract if the inspection reveals problems.
So it’s always a good idea to do a home inspection. It can alert you to serious issues that aren’t obvious at first, including asbestos, termites, serious plumbing faults, or faulty ventilation.
Remember that sellers aren’t legally required to make repairs if problems arise during a home inspection. However, you can convince them to make the repairs or use the faults as leverage to bring the price down.
Also, if you’re buying a townhouse or an apartment, you can consult the strata reports that can tell you whether the property is well run and decently maintained.
Research your neighborhood
You shouldn’t buy a home based on property and price alone. The neighborhood you’ll reside in matters too. In fact, a National Association of Realtors survey states that home buyers are more willing to compromise on the condition and size of the house rather than on the quality of the neighborhood.
Ask your real estate agent about the crime rate and the quality of schools in your prospective neighborhood. Check your new commute times to see if they’ll be manageable. Visit the neighborhood at different times to check for traffic and noise levels.
Lastly, attend a few open houses in the neighborhood. And even if you’re not particularly keen on the house, looking at home for sales is a great way to learn more about the area. And when you eventually settle on a home you love, you can easily compare your place to other homes in that neighborhood.
Choose your real estate agent carefully
Choosing a good real estate agent is important if you don’t want to end up regretting buying your first home. You should choose carefully because they will scour the market for homes that suit you best and guide you through the negotiation and closing process.
Ask for agent referrals from recent homebuyers. Make sure you interview at least a few agents and always ask them for references. Ask them regarding their experience helping first-time homebuyers and how they plan to help you find your new home.
Negotiate with the seller
As a first-time home-buyer, it’s easy to shy away from negotiating the price. Make sure you don’t make this mistake.
You’ll be able to save a ton of money by asking your seller to pay for any home repairs. And if he isn’t willing, you can ask him to lower the sale price to cover the cost of repairs.
You could also ask your seller to pay for some of the closing costs. But this is not always possible as lenders usually limit the portion of closing costs a seller can pay.
You’ll find that your negotiating powers depend largely on the local market. Driving a hard bargain is tough if there are more buyers than homes for sale.
Make sure you work closely with your real estate agent to understand the local market and build a buying strategy accordingly.
Finally, here are some ideas on how to cope with the stress and anxiety when buying your first home.
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