Palms sweating, heart racing, Benjamin Moore swatches haunting your every move. Relax. While purchasing your first home triggers unwanted angst, there’s help. Follow these tips to ease and enhance your homebuying experience.
Know your cash flow.
Major spenders and thrifty buyers should all have an idea of their spending habits. Even if you aren’t in massive debt, note how much money remains at the end of your monthly depletion. Just enough to get by? Or room to acquire some dream home features? This will help you determine what type of house you can swing.
Plug into a home affordability calculator for guidance.
Think (or re-think) property type.
You may have your heart set on a single-family home and all the space that comes with it. If you’re ok with a smaller abode, lighter maintenance, and more amenities, though, look to condos and townhomes. Just be prepared to submit to the almighty HOA fees.
Here comes the fun. Choosing a neighborhood is right up there with property type. Evaluate the surrounding schools. Whether or not you plan to procreate, the academic caliber influences a home’s value. Other factors to consider—safety stats and proximity to groceries, restaurants, hospitals, etc. If you simply can’t be bothered, look into the noisiness of the neighborhood. Spying on potential neighbors is also an option, but you didn’t hear that from us.
Check your credit.
Unless you’re planning to pay off this life-altering purchase in full, you’ll need a mortgage loan. How do you get one? First, you’ll need to know your credit score. If possible, shave off some debt to boost your score. Regardless, your credit score is vital for loan qualification, so have an idea of money coming in and the “b” word…bills.
Dig up documents.
Applying for mortgages without income and tax documentation is near impossible. Get used to the number “two” for required documents:
Last 2 pay stubs
W-2s from the previous 2 years
Past 2 months’ bank statements
All pages count. Better to have than to have not.
Weigh down payment possibilities.
A number of first-time homebuyers put down 20%. Intimidating? You can definitely opt for a smaller percentage. However, be mindful of possibly paying more in the long run. Hello, private mortgage insurance.
Smart ways to start saving for a down payment include allocating dollars from different sources—tax refunds, work bonuses, and even an automatic savings plan for big picture buys.
Find a trustworthy agent. Then, trust your agent.
Make sure your pick knows neighborhoods, ideally the ones in which you’d like to live, and exudes motivation. The best agent walks the tightrope of strong offers and budget adherence. As your agent may instruct you, avoid bidding wars.
You may experience the urge to start inviting your agent to offer advice in other life areas—kids, clothes, diet, other drama. Try and focus on the home, first. You can always invite them over for a glass of wine over closing details.
Attend an Open House.
Walk through time! Other than the chance to snag some free snacks, open houses offer firsthand home viewing and neighborhood touring. Note the condition of any homes you see, and ask questions. When’s that bungalow’s birthday? Did the extremely noticeable stain in the kitchen appear recently? When was the heating last assessed? Knowing as much about your largest life investment is crucial.
Next stop, homeowners insurance. Lenders require, so compare rates to score a price that works for you. Policies vary, and cheaper often equals less coverage/more out-of-pocket costs. Unfortunately, insurers won’t always stick with you. If the home doesn’t match their plan or standards, you may have to drum up new backers.
Floods are usually off the table in, so if you’re looking in a waterlogged area, keep your head above it. Track down separate flood insurance.
You don’t have to pull out the yoga mat or respirator. Don’t freak out over minutia. Prepare to negotiate a little. Minor details like ancient lighting fixtures, outdated rugs, and strange paint colors can all be modified in the future. Hone in on what you’re willing to overlook and what belongs in the deal breaker column.