Top 7 tips for First Time Buyers
1. Knowing how much house you can afford.
It's very easy to get caught up in comparing neighborhoods, home layouts, and square footage, but a lot of first time home-buyers don't put as the same effort in researching their financial options. Talking with a qualified lender and obtaining a pre-approval are one of the first things buyers should do. Your agent should be able to recommend several good lenders who can go over the multitude of options available. By figuring out how much house you can afford, you don't risk falling in love with one you can't.
2. Understanding the full costs of home-ownership.
Homeownership can be a costly endeavor, such as the normal wear and tear repairs, or the major ones like a leaky roof. Rising utility costs must also be factored. To be safe, set aside a small percentage (about 1%) of the home's purchase price to be used annually for repairs and maintenance.
3. Including property taxes and insurance in the budget.
Property taxes, like your home value, are likely to rise over time. Call the county's local tax assessment office to get a better idea of how they tax and how to appeal assessments. Talking to your neighbors might also give you a good idea how much the taxes have increased from year to year.
4. Being prepared for competition.
It is not uncommon to find yourself in a competition situation where you and others have submitted competing offers on the same property. Discuss with your Buyer Specialist what to expect in a competition situation and how to negotiate your offer appropriately.
5. Hiring an experienced home inspector.
A professional home inspector can possibly save you thousands of dollars or even stop you from buying a money pit. A seller isn't likely to tell you there's mold in the basement or the walls are poorly insulated, but a home inspector is trained to find these and many other common problems. An experienced real estate agent will have many good recommendations for a home inspector as they work with them all the time. Also, if you know anyone who has moved recently, they might also give you some good tips for finding a home inspector. Remember to make sure they are experienced, licensed and insured. It also helps if they have had experience as electricians or plumbers.
6. Taking it one step at a time.
You've seen your dream home and you want it to make it your home immediately. Make sure not to overextend your credit to do so. Also, don't assume any improvements will pay for themselves by increasing the home's value. Patience pays off in the long run, and making gradual improvements over time will ultimately benefit the homeowner.
7. Including appropriate contingency clauses in the contract.
There are a many different types of contingencies available within a purchase contract. For example, there's a home inspection contingency, for any surprises you may encounter, an appraisal contingency, and a mortgage financing contingency. All of these are to protect you, the buyer, in case you lose your job and the financing falls through, or the appraiser has a different value in mind for the home than what you offered. Contingencies are a way to get out of the contract with your earnest money deposit in hand. Without these clauses to protect you, you risk losing not only your deposit, but in some cases being forced to settlement.