10 Things to Consider when Buying Your First Home
Buying your first home can be terrifying. This statement may sound a bit dramatic, but for those entering this commitment for the first time, terror may be an understatement. For those showing an interest in investing in real estate after the 2008 collapse, the decision to purchase can be challenged with even more apprehension. In 2008, we all realized that homeownership isn’t for everyone and we saw just how quickly things can go from good too bad in both the economy and real estate market. With all these facts and fears swirling around in your mind, it’s important to not let this scare you too much. The decision to buy a house is a big one. You should be proud of yourself if you decide to start looking. If you’re ready, a free rate quote using our multi-step calculator or reach out to a dedicated mortgage advisor.
Before you the lead of faith, here are some important things to consider:
- Am I financially ready for a Mortgage? This personal question is one of the most important ones to answer when you’re considering buying your first home. The best place to start in answering this is to talk to an experienced loan officer and go through the home pre-approval process. Once the pre-approval process is finished, it’s best to sit down and really think about what you can afford. Since you may be approved for more than you can actually afford in your month-to-month mortgage payment, this is the ideal time to look at your expenses and income with a critical eye and set a budget.
- Will I live here for a minimum of five years? Before moving forward in the home buying process, it’s important to be honest with yourself and ask a lot of hard questions. The hardest one: Where do I see myself in five years? Thinking of the future might freak you out, but it’s important. Will you be starting a family or switching jobs? Will you need more room and want a larger home? Our Housing Buzz Team suggests homeowners stay in their new house for at least five years. Why? Typically, those who move before the five year mark have a large amount of the principal balance leftover. This is due to the fact that for the first few years you’re in a home, you’re paying the interest and not the principal, leaving you with little equity in the home. If you sell before this mark, it’s likely that you won’t recoup expenses.
- What kind of neighborhood would I like to live in? When shopping for a home, it’s vitally important to factor in elements of the neighborhood that you’re looking in. What are the schools like? Are there a lot of renters? What are other homes in the area selling for? Answering these questions will not only help you understand how your home will resell, but also tell you about the demographics in the neighborhood. For example, if the area has good schools, you know it will have a lot of families and when it comes time to sell, you won’t be hard-pressed to find an interested buyer. On the other side of the coin, if the neighborhood is filled with renters, you could be taking a bit of a risk. It only takes one messy neighbor or renter to throw off the value of your home. It’s best to start your research early by pinpointing a few different areas where you know the real estate values are increasing and where you’ll feel at home.
- How do I find the right Realtor? When shopping around for a Realtor, it’s important you look for someone you can have a professional, financial relationship with. Realtors can be friendly, but they shouldn’t be your friends. You really want someone who is going to go to bat for you and get you the right price on a home. When it comes to something this important, you don’t want things sugar coated. For first-time homebuyers, it’s also imperative to work with someone you can trust to lead you to the right home for your needs. Feel free to take your time and schedule a few, short interviews before making a decision.
- What is my budget? Buying a home comes with some hidden costs: inspections, closing costs, and more. As mentioned in the pre-approval stage, sitting down and looking over your income is a vital step in the home buying process. It’s also important to factor in a rough estimate of the hidden costs that come with buying. For those who are not into math, scheduling an appointment with a qualified financial advisor may be in your best interest.
- How much time should I give myself to make a decision? Many homeowners say “You’ll just know it’s the one and you’ll want to make an offer on the spot.” While this may be true for some, it isn’t always the case for first-time homebuyers. Buying a house is a big commitment, both financially and emotionally. If you are shopping in an area where you don’t have to pounce quickly, take all the time you need to make a decision you are comfortable with.
- Should I get a turnkey house or a fixer-upper? The answer to this question varies from one person to the next. With a turnkey house, once you get the keys you can move right in. However, turnkey homes are normally set up to suit someone else’s taste and often cost more. If you’re looking for a space you can make your own and to save money, then it’s best to get a fixer-upper. But, the catch with these homes is that you may be living in a construction site and you may need to have more money on-hand to make the necessary changes. While there are rehab loans available, you should have a solid grasp on your living needs, time restraints, and skills before investing in a home that needs a lot of work.
- What kind of loan is best for me? Qualifying for a home loan completely depends on your financial history. For those who have options, it is best if you have guidance from a mortgage professional that has an understanding of your finances, credit history, and any other factors that can affect the loan decision.
- Will this house meet all of my needs? When shopping for a home, first-time homebuyers need to think long and short-term. It’s best to think long-term when it comes to re-sale and a growing family. If you plan to have kids, make sure you have space for them. If you want to fix up the home and re-sell it, think about what homes are going for in the area. Before shopping, you should also have a clear list of must-haves. This will help you set aside any emotions and keep your eye on the essentials you need to be happy with your decision and call a place home.
- Does this contract work for me? Congratulations! You’ve made a decision on your first home and have reached the contract stage. However, before signing anything, it’s now time to read the fine print. Before signing any contracts, be sure read them over carefully. After all, this is the first big purchase you have ever made, so make sure you’re not signing on for a financial nightmare. If there is anything you don’t understand in the contract or if you need clarification, don’t hesitate to ask a qualified mortgage broker and Realtor for guidance before adding your signature.
Our vLoan Teams understands the struggles and questions that go into buying your first home. We have a dedicated staff here to offer guidance that is specific to your situation and needs. For more information on buying your first home or speak with a team member, please feel free to contact us today. Start the digital mortgage process with a free online rate quote!