Congratulations on looking for your first home. This is one of the biggest investments you’re likely to make, and we know you’re excited.
However, before you get started, we want to make sure you get off on the right foot. Buying a home can be a complex matter, and you don’t want to go into it blind.
So, the team at Josh Sarangal Homes has put together this guide to run you through each step, from beginning to end, to make sure you’re primed and ready to go.
Let’s get to 7 tips for first-time homebuyers that will make your home-buying journey easier.
What is a First-Time Homebuyer?
On the surface, this looks like a pretty simple title to define. It’s just someone who hasn’t bought a home before, right? Well, it’s actually a little more complex than that, and you can get first-time homebuyer benefits even if you have owned a home before in some cases.
First, you have to have owned a home for more than three years to no longer be a first-time homebuyer in a legal sense. So, if you managed to buy a home at one point, only had it a few months, and sold it, you’re still eligible for certain benefits.
Also, if you’re married to someone who hasn’t bought a home before, you count as a first-time buyer.
This is important because you enjoy lower taxes, downpayments, and other perks.
Determine Your Ability to Own a Home
Even if you get government perks by being a first-time homebuyer, you don’t want to waste this chance before you’re ready. So, you need to be honest with yourself about your ability to properly own a home and maintain it.
Most notably, you have to understand your financial status. Ideally, you should have enough money to afford the type of homes you’re looking at in the long term. This means having stable, secure, income that matches the requirements of the market you’re in. If you do the math, and you’ll barely get by, it might be better to wait.
Then, you need to have some funds available for an emergency. When you buy a home, you’ll take a substantial financial hit, and if anything else happens, you don’t want to be left with nothing. Build a savings account that can sustain your needs for six months to a year.
Finally, you need to know your credit score. You don’t want to wait for the bank to run a credit check when you’re ready to buy a home. You want to check your credit as soon as you start getting serious about the prospect. Credit takes time to repair, and if you unknowingly have bad credit, you might get close to the finish line just to have your dreams halted for a year or more. If you check early and your credit is bad, you know you need to repair it before you take the next step.
Keep Your Funding Liquid
Let’s assume you have great credit, and you’re building up a savings account before you start looking at homes for sale seriously. Right now, you have to consider inflation rates.
Your dollar is actively losing value, and if you just toss your savings into a shoebox, it won’t be worth as much as you think it is in 3 years when you’re ready to buy a home.
Instead, consider a Certificate of Deposit or a high-yield savings account. Both of those options carry little risk, and they’ll build value over time; helping you protect your savings from inflation.
Determine Your Needs
You’ll probably have a fair understanding of this as soon as you start thinking about buying a home, but you should keep it in mind throughout the process.
How much space do you need? Do you need more rooms to accommodate future children? Is a condo a better deal? How long do you plan to stay, and what type of home will facilitate your growth during that time?
Get a good idea of the type of home you need and research the general cost of a home that meets that criteria.
Apply for Pre-Approval
You might think that you need to have a prospective home in mind before you start approaching banks, but you actually need to talk to the bank first.
This is for two reasons.
First, sellers typically won’t entertain any offers that aren’t backed by pre-approved mortgages. Selling a home is a complex and time-consuming matter, and if you can’t come to the table with proof that you’re serious, they won’t want to deal with you.
Then, there’s the fact that the bank might not agree with you on how much you can afford.
Sure, when you do the math, you can afford a nice home in a great neighborhood pushing $500,000. Especially with 30 years to pay it off. However, the bank will look at all your other debt, the length of your career, and tiny details that you didn’t think about, and they’ll likely only be willing to give you a fraction of what you thought. To know what you really have to spend, you need to go to the bank first.
If you’re not sure about how to get pre-approved for a home loan, you should definitely read our ultimate guide on the matter.
Consider the True Cost of the Home
The price you see in a listing and the monthly payments your bank requires are just two factors of a home’s cost, and they’re extremely simplified.
You also need to consider the property taxes, cost of living rates, and service costs in the area you’re moving to. Otherwise, you might find a home that seems very affordable, and then go broke a year later due to the area being too expensive to live in.
Make an Offer
Finally, when you check all these items off your list, you’re ready to go through home listings, find the perfect home, and make an offer.
If the seller likes your proposal, you’ll be a new homeowner. If they don’t, you’ll either negotiate or look somewhere else.
Don’t Do It Alone
One final, and probably most important tip for first-time homebuyers is that you do not want to go through this process alone. We’ve highlighted the general process of buying a home and what you need to secure before making an offer, but it’s a lot more complicated and frustrating than it sounds.
Especially when it comes to reaching out and negotiating an offer with the seller.
Instead, it’s crucial that you hire an experienced real-estate service such as Josh Sarangal Homes to guide you through the process and help you make the right decisions. A real-estate service can mean the difference between getting an affordable forever home you’ll love and losing tons of money on a home you can’t stand.
Contact us, today.