Buying your first home is an enormous investment and a very big stepping point towards life changes. In truth, most home buyers even realize how much changes when you purchase your first home. Because of this importance, every step towards your first home purchase should be taken carefully and wisely. Nonetheless, there are huge benefits towards owning a home, rather than renting, such as your capital actually going into something that you own, rather than disappearing over the course of your lease rental. Here are some important things to know about buying your first house…
Be Ready for the Commitment
As stated above, buying a home is a huge responsibility, and certainly not one that you want to take lightly. For this reason, it is very important to actually know that you are ready to commit to purchasing a new home. In terms of cost, owning a home can be quite a financial strain, initially, although may pay off as a long-term investment. Do your research about the different types of costs that might sneak up on you, as a homeowner, such as property taxes, insurance, or HOA fees, not to mention the costs of maintaining your home that you have to put forward, yourself.
Strive to Have a Larger Down Payment
Although it might be tempting to move forward on purchasing a home before you have a substantial down payment (if you are even able to do this), it is a move that will end up costing you, in the long run. Purchasing a home becomes a much wiser financial investment if you take the time to build up a sizeable down payment. Not only will this mean paying less interest and lower monthly payments, over time, but it also gives you more leverage as a buyer to get a better deal on a home. Although the larger the down payment, the better, a good target to aim for is to save up at least 20% of the home’s value (although many people don’t even do that).
Your Not Just Buying a Home, You’re Buying into a Neighborhood
As a general rule of thumb, when looking for real estate, there is a balance between a nicer location and the amount of space available to purchase. A $200,000 home could be a sprawling 3-story home in the middle of nowhere, but only a tiny rambler in an area that is highly desirable. The right option here is largely based on your own personal preference. Some people simply want the most house for their dollar, while others might want to be closer to a cultural center, where there are likely more work opportunities.
Try to Qualify for Special Loans
Before you start applying for a loan from a bank, or even before you start shopping for houses, it’s a good idea to see if you qualify for any special loans that are offered by the state or federal government. For example, if you served, or are currently serving, in the armed forces, you might qualify for a VA loan, which offers favorable terms to our servicemembers. Another type of specialty loan is the FHA loan, which is insured by the federal government. This allows lower-income families to get a loan with favorable interest terms with a relatively smaller down payment.
Always Consult Your Real Estate Agent Before Bidding
You need to get on the same page with your real estate agent about your bidding strategy, early in the process. A real estate agent will have useful tricks that can help you get more home for less money. For example, you can set up a deal to match any offer that outbids you by $1,000 up to a certain maximum amount, but also make your initial offer relatively low. This prevents you from getting outbid, early on, while also potentially setting up a lower price than you expected.
Be Aware of HOA Rules, If There Are Any
The HOA rules of a specific neighborhood could be a make or break factor into whether or not a home is worth purchasing, for some people. A decent HOA will work well to keep everyone in the neighborhood happy, while also raising the property value of everyone’s homes, through guidelines that keep the neighborhood looking aesthetically pleasing and up to code. However, an HOA can also make life incredibly difficult by putting too many restrictions on inhabitants of the neighborhood or slipping in hidden fees. Do a substantial amount of research about the local HOA before settling on a specific home.