Buying a home is a huge step in your life and can be pretty intimidating if it’s your first time doing so and you don’t know much about it. Unfortunately, we’re never taught how to buy a home or given advice on what to look for or how financing it works. So, it’s up to you to figure out what to look for in a new home, how to negotiate and purchase it, and what to do after you’re officially a homeowner. While I try to give the best tips I can for the first-time homebuyer, you should also continue doing research on your own to be as informed as possible.
Know your budget
Because you begin searching for a home, it’s important that you know what your budget is and how much you can actually afford to pay on a mortgage. Avoid jumping into homeownership before you’re ready to afford it. You may not be at the place in your life where you can afford a home, so it’s okay to wait, even if that means renting longer. Check your credit score, because it determines how much of a loan you can get approved for, and keep track of all your debt and monthly expenses. One of the biggest mistakes you can make is overestimating how much of a mortgage you can afford, because you don’t want to live in a house that’s beyond your means of living.
Understand mortgage lingo
Before beginning your house-hunting, take time to learn what different terms mean, such as being pre-qualified for a loan versus being pre-approved. Getting pre-qualified involves barely any investigation into what you can actually afford, so you may be pre-qualified for an amount, look for homes in that range, then realize you can’t get approved for the loan or can afford much less. Being pre-approved means that your finances were examined and the amount is much more realistic to what you can actually afford. Other important terms to understand are down payment and closing costs.
Carefully select your agent
It’s incredibly important that you work with a real estate agent who you trust and genuinely helps you select a home. Check out my recent post on choosing the best real estate agent, and then find an agent who’s best for you. Try to get recommendations from people you know and find an agent you connect with initially. Getting the home you want has a lot to do with your real estate agent!
Examine the home
No matter how perfect the home seems, you definitely need to carefully examine it when you go on a tour. There are often small imperfections you won’t notice on a quick walkthrough or you’ll be too enamoured with incredible details of the home to notice any issues. Learn what you should be looking out for and what could indicate a major issue down the road. Consider having it formally inspected before closing on a deal and having the property surveyed is usually beneficial. The sellers might not be trying to hide anything, but they could be unaware of a major issue that you’ll have to deal with after owning the home a few years.
Negotiate for the home
Finally, learn how to negotiate the price of a home. Do not be afraid to make an offer that’s lower than the asking price, but avoid going too low or your offer could be rejected or easily outbid by another person. Set a limit for how much higher than your original offer you’ll go and then work with the seller and your agent to reach an amount everyone is happy with.