Buying your first home: what a thrill, what an adventure, what a thrill. You have reached a new peak in your life. How do you avoid some of the common pitfalls other beginners have made and know you made the right choice? Mistakes can be costly when you let your emotions take over instead of treating this as a huge financial investment. The euphoria of finding your dream home can blind you to what you’re really ready to drive. Buying more home than you can comfortably afford, even if you “qualify,” creates stress and a lack of joy in owning a home. Sleepless nights, relationship breakdown, and potential financial disasters can easily be avoided by shopping wisely in the first place. Here are some simple things to consider before falling in love with that house.
1. Plan Ahead: From the beginning, start planning how you are going to buy that home. Request your credit reports and study them thoroughly. Are there any bugs you need to clean up? Your FICO score rules when it comes to getting a good rate on a mortgage. If you are currently renting, check your lease for an “Early Release Clause”. Will you have to pay a penalty for leaving early? During this planning stage, think about your life goals for the next 5 to 7 years. Are you starting a family or may other family members need to move in with you? How many people could be living in this house? Are you relying on two income? Could you pay for the house on one income if you had to?
2. Educate yourself on the home buying process – ask lots of questions. This is your first time and it’s a lot of money. A professional real estate agent will be happy to answer all of them. Work with an agent who is willing to share their knowledge with you. You need to know about all kinds of things, including how to look at a home, what’s in a contract, inspections, appraisals, financing, escrow, insurance folders, and the closing process. Ask for details, and if you don’t understand, ask them to explain again. Professional real estate agents want to know if you are comfortable with what you are doing. Don’t let the details get overlooked just because you don’t want to appear like you don’t know anything about real estate. How much could you reasonably know after all, is it your “first” time?
3. Excessive purchases: don’t compromise. Stay within your budget. And make sure you can live your life and still pay for the home you are looking for. It’s no fun owning a home and not being able to furnish it. Or you can’t afford to eat out again. Just because you are told you “qualify” for X dollars with a payment of Y does not mean you have to spend it all. Look at your lifestyle for the answers. Ask more questions about payment, including taxes, insurance, and home maintenance costs. Then review your budget for the home you are willing to buy. Then go to your mortgage lender to apply and get “approved” for a loan. This puts you in a better negotiating position when you are ready to do and offer. A home should give you pleasure, not hold you hostage. So when looking for homes for sale, stick to your established budget. Don’t look at houses more than 3-5% out of your range. Limit yourself now and avoid disappointment later.
4. Let your head rule, not your heart. The appeal can be a powerful force. You get emotionally involved with a home without thinking about it. Stick to your plan and don’t go over your budget, ever. Be objective, it’s just a pile of wood after all. Can you comfortably fit in space? Will your furniture fit? Do you have a special piece of furniture that you will not give up? Measure it and take those measurements with you when you look. How big are the rooms? If the dimensions are not on the listing sheet, please measure them yourself. Ask your agent what they think the home’s chances of reselling are. Check the home’s history – how much do people think it’s worth at today’s fair market value? When was it last sold? What was it last sold for? What improvements have been made to the property since then? Take a look around the neighborhood at various times of the day. How is the traffic? How does the sun travel over the house? Get a full inspection from a qualified expert in the field. Neither your family nor your friend. Spend the money and do it well. What are the negatives? Could you reduce or correct them all? This is the hardest part of the whole process. Your brain has disconnected from thinking and you are experiencing an emotional high. Go back to your plan and stick to it.