Purchasing your first home is a huge milestone, and a huge financial and physical undertaking. It can be a confusing and stressful process if you don’t do your research and know the proper steps for the road ahead.
Here’s a list of what I wish I knew before I purchased a my first home.
1. Work With An Agent Who Knows What They’re Doing
When choosing an agent, make sure you don’t just go with someone you know. This is a process that you’re literally about to spend hundreds of thousands of dollars on.
Movoto should obviously be the first step in this process since they provide experienced, local real estate agents who’ve completed a certain number of transactions in order to work with the company.
If this is your first home purchase, choose an agent who specializes in purchases/buying as opposed to selling.
2. Leave Your Heart At The Door
While it’s easy to fall in love with a property or neighborhood, it’s also easy to fall in love with properties outside of your price range.
In the real estate game, keeping a level head in terms of the numbers, walking away from bad deals, and knowing your limits is an important piece of the puzzle for a successful and enjoyable home transaction.
3. Don’t Forget About Your Lifestyle
A new home can come with a pool, a yard, a garden, and more. When buying, make sure you think about the extra time and work that goes into maintaining the home and the landscape. If you don’t picture yourself out in the garden on a Sunday morning, you may want to add a few items to your “no” list.
Consider the realistic kind of life you want to lead, the timeframe that you’ll be staying in the home, and if there are any life changes on the horizon in terms of career, family growth, and income.
4. Research The HOAs
A homeowner association is an organization of property owners that manages and upholds the rules of a condo building, subdivision, or development. If you’re buying in a community with a homeowner’s association, make sure you understand what you’re paying for.
Does it include community facilities, building upkeep, etc.? In addition, find out if there are any upgrades or changes slated for the future, which translates to an increased monthly cost to you.
Note that these funds aren’t helping you to build any equity in the home either, but do provide an incentive for neighbors to abide by community rules.
5. Don’t Plan To Use All Your Cash On The Down Payment
Before you plan to wipe out your savings accounts to cover the down payment, ensure that you have a 3-6 month emergency fund in place and that you’ve factored in costs for the move, paint and supplies, maintenance, upgrades, and appliances.
6. Talk To The Neighbors
Prior to committing to a home, reach out to the neighbors to introduce yourself and ask some questions. Ask if there are any concerns about the neighborhood, what the pros and cons are of the area, and be sure to consider noise levels, construction projects, and the general population in itself.
7. Cosmetic Changes Can Be Relatively Easy
Don’t discount a home with a bad paint job or old faucets. Some items are rather easy to change or correct, so before walking away from what could be an otherwise good purchase – consider the time and cost that would be involved in making some adjustments – it could be cheaper than you think.
Pro Tip: Focus on the layout of the home, the amount of light the rooms get, the ceiling height, and the amount of outdoor space.
8. Oh, The Paperwork!
Expect to be filling out and signing forms to the point where your hand cramps. Not only will you need to provide tax returns, pay stubs, and bank account statements to receive loan approval, but you’ll also have a slew of paperwork to sign once you close for the mortgage.
9. Don’t Make Any Sudden Changes
The amount of the loan you’ll be approved for on your mortgage is based on your income and assets. Now is not the time to change jobs, buy a car, or take on any additional debt as these changes can cause swings to your credit score and could reduce the amount you’ve been approved for.
10. It Will Feel Like You’re Bleeding Cash
Aside from the chunk of change, you’ll be putting towards your down payment, expect to pay fees for loan processing, home inspection, title transfer, and more.
These fees will nickel and dime you (in the format of hundreds), which is why you should review all closing costs with your lender to ensure you understand your out-of-pocket and out-the-door costs.
11. Be Realistic (And Flexible) With Timing
Although your plan may be to find a place, move, and be settled in a time span of a few months, don’t put pressure on yourself to meet this goal, and don’t allow yourself to be pressured either.
According to the National Association of Realtors, the average home search takes 12 weeks. Add onto that 30-60 days for escrow and you could find yourself needing a longer timeframe.
12. Evaluate The Costs Associated With Renting vs. Owning
When you rent a home, you have the luxury of having a landlord or property manager who takes care of the maintenance and landscaping for you. In some cases, utilities and other bills are covered as well.
Homeownership unfortunately doesn’t include the same. If the lawn needs to be mowed, plumbing fixed, or roof patched, the costs will fall onto you. Ensure the change in costs is factored into your budget.
