If you’re like most people, your home is the biggest purchase of all. It can be an exciting time or it can also feel overwhelming and stressful. You may have been dreaming about this moment since childhood but now that it has arrived, you don’t know where to start!
The good news is there are many ways to make sure that buying a house goes as smoothly as possible.
To get you started, here are some tips for buying a first house:
Table of Contents
- 1. Start with a Plan
- 2. Make a List
- 3. Be Realistic
- 4. Know What's Included in Property Taxes
- 5. Find a Mentor
- 6. Shop Around
- 7. Shop Wisely
- 8. Understand the Difference Between Short Sales and Foreclosures
- 9. Keep Saving Money
- 10. Make Sure You Have Enough Cash Saved Up
- 11. Check Your Credit Reports
- 12. Consider Using a Mortgage Broker
- 13. Consider Using a Lender Who Specializes in Helping People Move
- 14. Look into an FHA Loan
- 15. Get Pre-approved
- 16. Find a Trusted Real Estate Agent
- 17. Get References
- 18. Don't Rush Into Anything
- 19. Be Patient
- 20. Hire Professional Inspectors
- 21. Be Wary of Scams
- 22. Know Your Rights
- 23. Have a Contingency Plan
- 24. Make Sure Everything is Documented Properly
- 25. Don't Forget About Homeowners Insurance
- 26. Look Into Title Insurance
- 27. Don't Forget About Closing Costs
- 28. Keep Records
- 29. Take Care of Paperwork
- 30. Stay Organized
- 31. Enjoy the Journey
- 32. The Last of My Tips for Buying a First House is the Most Important
1. Start with a Plan
Before making a decision about any big purchases, take the time to sit down and write out what you want in terms of features, style, location, price, etc. This will help keep things organized and give you something concrete to work toward.
2. Make a List
Once you have a general idea of what you would like from your dream home, create a detailed wishlist by listing every item you think might fit into your space. Include everything from appliances to furniture pieces to flooring options.
Don’t forget to include details such as square footage, number of bedrooms/baths, garage size, yard area, etc.
3. Be Realistic
As a first-time buyer you probably aren't familiar with all of the responsibilities involved. Therefore, you should expect certain costs associated with owning a home.
However, you shouldn't assume that those expenses will fall under one category only. Rather, you should consider them all at once. After all, you wouldn't buy a $1 million dollar sports car without considering maintenance, insurance, depreciation, taxes, etc.
A mortgage calculator can help you gain perspective of your price range and what kind of monthly mortgage payment you can afford.
4. Know What's Included in Property Taxes
When purchasing a home, you must pay attention to its tax bill. The total cost depends on several factors including location, size, and number of rooms.
5. Find a Mentor
Having someone who knows the local real estate market well can save you thousands of dollars during the home buying process. A trusted friend or family member can also provide valuable advice, as they were once a first-time home buyer.
6. Shop Around
Now that you have a clear vision of exactly what you want, it’s time to shop around. There are so many different places online to find homes – including realtor websites, Zillow, Trulia, Redfin, Realtor.com, Craigslist, Homesnap, and even Facebook Marketplace.
Take advantage of these resources to see if they offer anything special that could benefit you when searching for your perfect home. Also consider visiting open houses near you. Many times, sellers will host events specifically to show off their property in a competitive market.
7. Shop Wisely
When looking for a new house, consider shopping in neighborhoods that meet your needs. For example, if you like big yards but live near busy roads, choose a neighborhood farther away from traffic.
8. Understand the Difference Between Short Sales and Foreclosures
Short sales involve properties whose owners owe less than their current value. In contrast, foreclosure refers to homes owned by people who have defaulted on their obligations.
9. Keep Saving Money
If you want to buy a house, you need to have saved money up for a down payment. It may take some planning and sacrifices, but it's worth it. Once you reach this goal, you're well on your way to becoming a first-time home buyer.
Following my Cash Back Stacking system can help you with this saving money thing. Check it out now.
10. Make Sure You Have Enough Cash Saved Up
When you first start looking for a new place to live, you won't necessarily realize what kind of financial burden you'll face. For example, you might find a great deal on a beautiful condo but neglect to factor in the monthly fee required to maintain its upkeep.
As a result, you wind up paying more than expected. That said, you should try to save some extra funds so that you can cover any unexpected repair costs that your monthly income may not cover.
Paying off other loans may be a part of this strategy as it frees up your monthly budget to help cover unexpected repairs.
11. Check Your Credit Reports
Your lender will request copies of your three major credit scores. These numbers reflect your overall debt load, payment history, and ability to repay debts.
Just remember to keep paying those bills on time and your credit score will rise, thereby lowering your mortgage loan interest rate.
12. Consider Using a Mortgage Broker
If you decide to go ahead with a traditional bank-based home loan, then you may not benefit from all the perks offered by online lending platforms. For instance, these sites allow you to apply for loans without having to visit multiple branches.
Moreover, they usually offer lower interest rates compared to conventional mortgages. Additionally, brokers can assist you in choosing between different types of loans. They can also guide you towards a reputable mortgage lender.
13. Consider Using a Lender Who Specializes in Helping People Move
Moving companies often charge high fees for their services. Plus, many movers simply take advantage of customers because they lack experience themselves. Fortunately, there are alternatives available.
One such option is called “moving lockers.” With this service, you pay upfront for storage space which allows you to pack and unpack during your transition period.
Then, when you're ready to close escrow, you simply drop off your belongings at the locker facility. Finally, you receive reimbursement via check or credit card.
14. Look into an FHA Loan
An FHA loan is insured by the federal housing administration, which makes them more affordable than conventional loans because they offer lower monthly payments. FHA loans allow a first time home buyer to borrow more than they would otherwise be able to afford. Because of this, they tend to cost much less than a conventional loan. They also require smaller deposits compared to traditional loans.
The main requirement is having enough money saved up to cover at least 3% down payment when buying your new house. If you don’t meet this minimum amount, however, there are other options available. You may still get approved with less than 3%, but you might not receive any benefits from the loan or pay higher interest rates.
However, this type of loan comes with its own set of rules and regulations. For example, borrowers must make sure that they live within the area covered by the mortgage companies. Also, buyers cannot use cash-out refinance option unless they already own another property. In addition, applicants must prove that they have sufficient income to repay the loan.
15. Get Pre-approved
Many lenders offer loans specifically designed for first-time buyers. These programs allow you to borrow more than what you normally qualify for when purchasing a new home. In fact, some banks will give you up to 90 percent financing! That means you won’t have to put 20 percent down initially.
Of course, these types of mortgages come with higher interest rates compared to traditional loan options meaning the house will cost you more in the long run than other types of mortgages.
While shopping around isn’t always necessary, getting pre-qualified before starting your search can save you money and headaches later on. Pre-approvals allow lenders to look at your credit report and determine whether or not you qualify for financing based on your income level.
Getting a preapproval allows you to focus on finding a house with the right purchase price while knowing that you aren’t going to waste time looking at properties that you cannot afford.
Once you have determined what you will be able to afford for a monthly payment and have found the mortgage lender you want to work with, remember to get a copy of your pre-approval letter and have it handy as you go through the process.
16. Find a Trusted Real Estate Agent
When choosing who should represent you during the process, choose someone who knows the market well and understands local trends. Your real estate agent should also be able to provide insight regarding current listings and other important factors that affect pricing.
Finally, ask yourself if you trust him or her enough to handle the sale of your home. If you answer yes to both questions, then he or she is probably the best person for the job.
17. Get References
Once you've found a property that suits your lifestyle and budget, it's time to take the next step! Now that you've narrowed down your options, it's a good idea to do some research on the pros and cons of each.
First, it's a good idea to ask your close friends and family members what they think. You're not obligated to take their advice, but it is a good step towards making sure you've found the right place.
They may even be able to give you a referral for a trusted real estate agent.
18. Don't Rush Into Anything
There's always another beautiful house out there in your price range. While you want to find the perfect property as quickly as possible, rushing through the process isn't wise. Take your time and look around before deciding where to invest your hard earned cash.
19. Be Patient
Buying a home takes time. Even though you may have found your ideal spot, it doesn’t mean that you will close on day one. Most transactions require several months of negotiations between buyer and seller. During this period, you will receive multiple offers and counteroffers until you finally settle on a price.
Negotiating a sales price can sometimes take weeks or even months. This is why it’s crucial to remain calm throughout the entire process.
Keep in mind that once you sign a contract, you become legally obligated to buy the home. So, if you decide to back out after signing, you will lose thousands of dollars in earnest money.
20. Hire Professional Inspectors
A real estate inspector will evaluate the condition of the roof, plumbing system, electrical wiring, heating/cooling systems, appliances, etc. The home inspector will let you know whether or not the home needs repairs prior to closing. And remember: Repairs cost money. The home inspection process can save you hundreds of dollars later on.
21. Be Wary of Scams
There are many scammers out there trying to take advantage of unsuspecting homeowners. So, always do thorough research before hiring contractors or service providers.
22. Know Your Rights
Before making any decisions, know all of your legal rights. For example, if there is damage to the interior of the home, you must inform the seller immediately. Otherwise, you risk losing your deposit.
Similarly, if you discover major issues with the foundation, you must notify the builder within seven days. Failure to do so could result in voiding the warranty.
23. Have a Contingency Plan
No matter how prepared you think you are, life rarely goes according to plan. So, having a backup plan just makes sense. What does that plan entail? Well, maybe you'll end up renting instead.
Or perhaps you'll sell your car and use the proceeds towards your mortgage payment. Whatever the case may be, having a back-up plan ensures that you're financially stable after moving day.
24. Make Sure Everything is Documented Properly
Once you have signed a purchase agreement, you will need to hire a lawyer to review the document thoroughly. The attorney will ensure that everything has been agreed upon by both parties and that there are no hidden clauses that would cause problems down the road.
25. Don't Forget About Homeowners Insurance
You need to purchase homeowner's insurance as soon as possible. The reason being, most insurers require coverage within 30 days of signing the contract. Also, you must notify them immediately if someone breaks into your property.
In addition, you can also add flood damage protection by purchasing a separate policy like Allstate Flood Insurance.
26. Look Into Title Insurance
Title companies insure against loss arising from errors in deeds, liens, easements, encroachments, boundary disputes, and more.
27. Don't Forget About Closing Costs
You don't want to end up spending too much money when buying or selling a house. To avoid this situation, make sure you know exactly how much each party is responsible for at the close of escrow. This way, you can budget accordingly.
Don't let closing costs be a nasty surprise at the end.
28. Keep Records
If something goes wrong after you move in, it helps to keep detailed notes regarding maintenance requests, repair estimates, and receipts.
29. Take Care of Paperwork
Once you've signed all your contracts, please don't forget to notarize them. This process can be done at any public notary in your area. Notarizing your documents will give you peace of mind that they have been signed properly, thereby protecting yourself.
Remember to take these notarized copies with you when you close, and to keep them in a safe place until tax time.
30. Stay Organized
It's important to stay organized. If you're not, you can end up missing deadlines, losing documents, and making mistakes. If you hire someone to do accounting paperwork for you, it's important to make sure you trust them and you make sure they're organized as well.
If you use software, such as Mint, it will help you stay organized, and it's important to use a cloud service so you can access the documents from a computer or device that you have with you wherever you are.
Plus, if you ever get audited or an error needs to be fixed, the software will make it easy for you to fix the error or find the document and get the problem taken care of quickly.
31. Enjoy the Journey
After all, homeownership is supposed to be fun. House hunting can be an exhilerating experience.
Many people go through the homebuying process only once, you shouldn't let stress ruin your experience.
32. The Last of My Tips for Buying a First House is the Most Important
Remember that you deserve a good life! But it's up to you to make the choices to attain that good life.
Owning a home gives you financial security and independence. If you're ready to start living the American Dream, then now is the best time to act. Join the ranks of first-time homebuyers this year.
This overview should help put you on the path to making sure your home-buying process is as smooth and stress-free as possible. Remember that by educating yourself about the process beforehand, you'll be able to spot any potential hiccups before they arise.
As a result, putting in an offer on a house will feel like less of a daunting process because you'll already understand what steps are ahead of you and what you will have to do in order to get there.
This way, once everything is done, you won't have to worry about second-guessing whether or not it was worth all the effort because from this day onward your home will be one of those places where all your good memories are preserved and locked into forever.