Between the increasingly competitive nature of the housing market and the uncertainty that comes with buying your first house, it’s only natural to feel overwhelmed and apprehensive about taking that plunge. This only gets worse the less guidance you have, as costs start to skyrocket and you sink deeper into the confusing quagmire of retail.
So how can you free yourself from all that hassle?
Well, that’s where we enter the equation with our list of the top 5 things to know before buying your first house!
But enough talk, right? Let’s pull up some listings and jump right into things!
1. Make a Budget Before Buying Your First Home
The most important thing you can do before you buy your first house is to figure out what your budget is and how much you can afford. You want to plan out money to have a down payment of at least 10%, as well as any closing costs (like inspections and appraisals) tied to the buying process.
You’ll also want to look at the house’s value and make sure that you can afford the monthly “upkeep” fees (mortgage payments, home insurance, and so on). Adding an extra buffer for things like unexpected repairs or surprise costs also helps lower the chance you’ll end up in the red.
If you skip out on this step, you risk getting attached to a house that doesn’t work for your price range. Worse still, you could get through the buying process only to realize you can’t afford the house in the long run without taking out more loans and going into serious debt.
2. Find the Programs Built to Help You
As a first-time homebuyer, there are programs out there designed to give you a financial boost when buying a house. Many states offer financial assistance with closing costs and down payments if you have an annual income lower than a set value (changes by state). The federal government will let you pull $10,000 out of your individual retirement account (or IRA) without the 10% bonus cost for withdrawing early (though you have around 4 months to pay it back before the bonus cost activates regardless).
You can also get mortgages with support from the FHA, or Federal Housing Authority. These provide a trade-off of minimal down payment (sometimes under 5% of the home’s value) in exchange for bonus costs stacked onto your mortgage that pay back the FHA.
3. Know What You’re Looking For
Another important step when looking to buy a house for the first time is making sure you find the perfect property that fits your needs. Try to emphasize finding a neighborhood that pleases you, as finding somewhere you feel safe and has close proximity to good schools and/or jobs are things you can’t buy regardless of a home’s value.
It also helps to try and think about the future over the immediate present. Going for a low-cost home in a high-cost neighborhood gives you the chance to make renovations and improve the house’s value, creating a major return on investment when opposed to a high-grade house in a low-cost neighborhood.
4. Get Loans Before You Buy
Make sure that you get pre-approved for any loans you need before you go out and start house shopping. Not only will this help you plan out your budget better, but loaners can give you a letter of pre-approval you can show to sellers that will make them view you as a more legitimate buyer (and thus not veer more towards accepting other offers).
5. Bring In Some Backup
Of course, you can’t go wrong by bringing in a trusted real estate agent (like the folks at https://www.stroudandassociates.com/) to help you in the home buying process. They can help you find a quality home within your budget and navigate through the cavalcade of documents associated with home buying.
They can also sit in on negotiations with the sellers and help ensure you’re getting the best price possible.
Opening the Next Chapter of Your Life
So, now that you have this list of the top 5 things to do before buying your first home, where do you go from here? Well, if you’re looking for more tips and tricks on surviving the hassles of real estate, make sure to check out the other posts on our blog!
