Advice for First-time Home Buyers
Purchasing your first home might be one of the most expensive purchases you’ll make, which makes it even more important to do it right. The best way to go about shopping for a house is to line yourself up with a good realtor, explore financing and determine the priorities you seek in a new home. Most first time buyers make one or two mistakes during the process of buying a home. However, using these tips can help you to avoid mistakes and highlight important items to consider as you begin shopping for homes.
Determine What Features You Need
Before looking at homes, make a checklist of the features you need. For example, you might list the number of bedrooms, a large yard, fencing, home office and a family room. Next, you could list features that would be nice to have like a swimming pool, garden or patio.
Contact a Realtor
Ideally, if you’ve never been through the home buying process, you should consider working with a realtor to find a new home. He or she can show you several homes, write contracts, make recommendations and provide guidance for you as you complete the home buying and closing processes. Working with a realtor to find homes in the neighborhoods you like can save you time and money.
Realtors have access to the MLS (Multiple Listing Service), which is essentially a huge database of home listings supplied by real estate brokers. The listings include details and features about each property that is for sale. Your realtor can use the MLS to choose homes to fit your budget and location requirements, which makes it faster and easier to find your dream home.
Unfortunately, many new home buyers fail to take into consideration the importance of where the home is located. For instance, you may have found the perfect home, but if it’s too far from work it may turn into a major problem. Before choosing neighborhoods, consider these questions:
Is a short commute to work a requirement?
- Does the home need to be in a good school district?
- Do we want nearby access to entertainment?
- Is public transportation a requirement or just a bonus?
Household Costs and Other Expenses
It is smart to get a rough estimate of what your monthly expenses will run for a new house before purchasing. To start with you’ll have the principal and interest on the home. Add in insurance and taxes. You may have to factor in home owner association fees. Next, you’ll want to consider power and water utilities. Don’t forget telephone and internet services.
The home and location can affect the cost of homeowners insurance, which is required when carrying a loan on the property.
- Homes located near fire stations or hydrants usually result in a discount.
- Home security systems may qualify for better rates.
- Neighborhoods in high crime areas cost more to insure.
- Homes in known flood zones or areas prone to earthquakes are more expensive to insure.
Ordering home inspections on new or used homes isn’t a requirement for purchasing but it often proves to be a smart idea. Home inspectors provide an unbiased home inspection and cost about $300 to $500. They inspect the main household systems such as heating, cooling, electrical and plumbing.
Credit Check and Financing
Contact one of the three credit bureaus, and pull a free copy of your credit report before you consider financing and shopping for a home. Make sure the report appears to be accurate. The best interest rates for loans are offered to those people that have a good or higher credit score rating.
Keep in mind that you may have to put down as much as 20 percent for you down payment on the home. However, it’s possible, you may qualify for federally-backed loans, which often have lower interest rates, small down payments or no down payment required.
Before shopping for a home, contact several banks and loan institutions to check their interest rates. It’s also a smart idea to get pre-qualified for a loan before home shopping.
Take your time to find the right home that meets all you requirements. Consider working with a realtor and a home inspector for professional services and recommendations.