We're all about getting clients into homes they love. But before you make the leap, make sure you're really ready for home ownership. It should be a joy, not a burden. Take into account not only the cost of taxes, financing and insurance but also the expense of maintaining and improving the house. A good rule of thumb is to buy only if you plan to own the home for at least five years. If you think you may relocate before that (say, if you're planning a career or job change), it's probably wiser to rent.
If you're ready to buy, get pre-approved (not just pre-qualified) for financing. This will tell you what loan amount you qualify for based on your income, credit rating, down payment and existing debt. We recommend that clients pay down the latter (and avoid new debt, such as a car loan) before seeking a home loan. Check your credit score before a lender does, to spot and correct any errors. Getting pre-approved allows you to move quickly on a property (and, as a first-time buyer, you don't have to worry about first selling your current home).
Don't max out your budget. Borrowing the maximum loan amount to buy the priciest place you can afford is often shortsighted. Keep in mind that you'll have to pay two percent or more of the loan value in closing costs. You'll also be paying property tax and insurance. Also consider the need to save for retirement, education and other goals.
To get the most for your money, start by listing needs and wants. Needs are must-haves. If you're about to start a family, you need more bedrooms and baths. If you work at home, you need an area for that. Wants are non-essential niceties like a gourmet kitchen or a media room. If they fit your budget, that's great, but focus first on your essential needs.
Find a good real estate agent (like Drew) to help you focus your search. A savvy agent can clarify the trade-offs in choosing one home or neighborhood over another. Are you willing to accept a longer commute to get more space? Are you looking for proximity to good schools, shops and parks, which will typically cost more? Use online sources to research homes and neighborhoods, but don't stop there. If you're serious about a property, check it out at different hours of the day and night and talk to neighbors about what they like and don't like about the area.
Expect to look at plenty of homes to find one that seems right for you. Whether you bid above, at or below the asking price depends on various factors, such as how long it's been on the market, how much improvement it may require and information from your agent on comparable properties. Make the sale contingent on a satisfactory report from a certified home inspector, and arrange to be there for the inspection so you can voice concerns and ask questions. An inspection can reveal hidden issues that may justify nixing the sale, fixing the problems or negotiating a lower price. It can also give you peace of mind about your purchase.
Sound scary? Remember, every homeowner started as a first-time buyer. Fortunately, first-timers today have more resources than ever. Take your time, keep an open mind, benefit from the many helpful agents and lenders and you'll soon find a home to call your own.
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