1. Get pre approved for a mortgage. This is the first and most important thing any home buyer can do. Unless you are a cash buyer, neither you nor your Realtor can determine whether you can get a mortgage and if you can for how much. You are not ready to start looking at homes until you’ve done this. You can get recommendations on good local lenders from friends, family or your Realtor.
2. Be realistic. This is your first home not a showcase dream home and more important than glitz and glamor is location. Statistically you’ll likely going to sell this home within the first 5-7 years of purchasing it and you’ll want it sold as quickly and for as much as the market will bear when that time comes. Location trumps everything else. What determines prime location varies depending on the area you’re in; but consider things like school districts, walk-ability factor, proximity to shopping, restaurants, public transportation and most importantly employment.
3. Buy below your means. Lets say your lender pre-qualifies you for a home up to $200,000; just because you can afford this much doesn’t mean you have to. A general rule of thumb I suggest to my buyer clients is to try to find something you like that can be purchased for 10-15% less than the maximum amount your lender says you could afford. In the long run you’ll be much happier, you’ll have money to go out occasionally, to buy furniture for you new home or to use towards improvements you wish to make.
4. Stop watching HGTV and start watching DIY. There’s no better way to build up equity in your home than good old-fashioned sweat equity. Over the past decade I have been surprised at the number of first time buyers I’ve worked with who seem to think sweat equity is a dirty word. They want to move into houses that are perfect with everything already done for them. I bought my first home before I was twenty years old and like most first time buyers, I had more time than money and if you’re reading this article than you probably do to. Learn how to do basic things, like installing a laminate or tile floor, replace light or plumbing fixtures, and paint. (Here’s a hint: there is no single greater return on your money than a high quality paint job. Learn to paint well and your home will always impress people)
5. Focus on what really matters. Don’t worry as much about counter tops, floor coverings, paint, etc, these things can be changed as time and finances permit, focus on your heating and cooling systems, roof, and structural issues. Always use an experienced home inspector (I only recommend ASHI certified inspectors to my clients) and have a termite inspection. These are the items that cost real money and when your heating or air condition conks out or your roof starts leaking you have no choice but to replace or repair immediately and these are the big-ticket items.
6. Find an experienced Buyer Broker who will not engage in dual agency. Dual agency is when an agent has the home listed and they are also representing you the buyer. This is a conflict of interest no matter what they may tell you. You want someone who is committed to solely doing what is in your best interest and not focused on retaining the entire commission. Do not work with a new agent, look for someone who has been full-time in the business for a least five years and who can show you evidence that they have closed at least 12 transactions each year. This is big money you’re getting ready to spend, you want the best advice you can get and someone who has shown they know how to successfully negotiate a transaction.
7. Lastly, enjoy the search. This should be exciting, not drudgery, it’s your first home and hopefully you’re going to enjoy it for several years and have wonderful stories to tell about it in the future. If you’re a couple you don’t want it to become a point of contention between you.
- Securing FHA Financing – What you need to know. (midwestliving.wordpress.com)
- 5 Questions to Ask Your Home’s Inspector (jmetzgerhomes.com)
- Important Tips for First Time Home Buyers (doorfly.com)
- Sweat Equity … Literally (buyfixrent.wordpress.com)
- More First Time Home Buyers using Mortgage Brokers (msleetmacc.wordpress.com)