We love working with first time homebuyers because we believe in educating our clients so that they make confident decisions when it comes to their home purchase. Here are a few tips for first time homebuyers that we often see overlooked.
- Start your research now. Knowing if you can afford a home and how much home you can purchase are two important questions you’ll want to know sooner rather than later. This can mean missing an opportunity on the right home or the right interest rate. It could also mean falling in love with a home you can’t afford. Whomp, whomp, whomp. Have a lender look at your financial situation to either give you answers to these questions or tips of things you need to do to put yourself in the right position for the future. Make sure you get pre-approved before going to look for a home. Read our article Why You Need To Get Pre-Approved.
- Explore your options. There are a variety of home loan programs that you should explore that might benefit your home purchasing experience. Talk to multiple lenders to see who has the lowest fees and what each can offer you. Your loan is just as important as the house you buy – you might be stuck with a bad loan for years if you don’t make smart decisions during the process of home buying. I oftentimes see first-time homebuyers not ask enough questions or see what options are out there for their best financial interest long term. Knowledge is power. Don’t talk to just one lender.
- Get informed. Make sure your real estate agent is thorough in explaining the process and educating you along the way. This also goes on the lending side of things. Use this experience as an opportunity to learn more about the home ownership process and make sure that you are comfortable with the fees, location, home and rates you are moving forward with. Not enough first time homeowners ask enough questions. It could mean saving tens of thousands of dollars.
- Know what you are looking for. Having a clear idea of what you are looking for in a home and any costs associated with potential properties are essential for your long term and short term goals. Knowing your future plans, neighborhoods and costs associated with home characteristics are important to making a good decision.
- Don’t spend more than you can afford. Though you might fall in love with a neighborhood or a home with upgrades, what you can’t change always is your mortgage payment. Make sure your payment with property taxes and any other fees is something you can make work long-term. First time homebuyers think that just because they were pre-approved for a large amount, that they should spend all of that. Not true! Be smart, look at monthly payments!
- Don’t move too fast. Make sure you do your homework and get your pre-approval, but also be very intentional and thorough in such a big commitment. Take your time to make sure you are really ready for home ownership. When people tend to rush, things are overlooked in the heat of the moment.
- Don’t make large purchases during your escrow. Buying a refrigerator or a car during escrow or during the home buying process can throw off your finances when it comes to qualifying for a loan – and, it can also mean not getting your dream house. Put large spending off until after close of escrow.
- Waiting for the perfect house. I see a lot of buyers sit on the fence looking for that perfect “unicorn” house that just doesn’t exist. They think they are going to get a steal and have all the updates – but it’s just not out there. Being open-minded and listening to your real estate professional is key in knowing what to expect with the market.
- All those other fees. Other than the purchase price of a home, there are a lot of other fees associated with buying a home. Be sure your lender and real estate agent cover these costs so that you know what to expect. Things like Mello Roos, HOA fees and closing costs are areas you need to be taking a look at.
- Not properly negotiating for yourself. Whether purchasing a New Build (read our Tips To Buying A New Build) or buying an existing home – make sure you are represented and that your real estate agent explains how and what is negotiable in the transaction.
We love working with first time homebuyers and we’d love to answer any of your questions. Feel free to reach out and ask anything you need more information on! We’re always here to help!