When it comes to exciting and challenging experiences, buying your first home is right up there near the top of the list. By the time you buy a home, you’ve probably bought many things, from cars to jewelry, from vacations to tonight’s dinner. So really, you know how to buy things, and it shouldn’t be all that difficult. Right?
Well, yes, buying a house is not that difficult. But, as a first-time buyer, there are some potential pitfalls that can have long-lasting repercussions. Here are some suggestions for getting it right the first time:
- Get pre-qualified sooner rather than later. Understanding how much you can afford and what the costs will be in the long run are essential to your decision making—and to the seller who is considering your offer! Take the time now to talk with a mortgage banker, even if you’re not quite ready to start house shopping. There could be errors on your credit report that need fixing, and when you do start shopping, you want to be able act quickly in a highly competitive marketplace.
- Protect your credit score. Just because you are pre-qualified, there’s no guarantee your lender won’t think twice if your credit score changes before your loan closes. It’s critical to pay your bills on time, avoid opening or closing credit card accounts, and avoid maxing out your cards. Consult your mortgage banker before you close or open bank accounts, consolidate debt, settle collections, or withdraw funds for your down payment. If you have to buy a new car or if your employment changes (positive or negative), talk with your loan officer.
- Read and keep your loan and purchase documents. You will be asked to sign and complete scores of papers in the process of financing and purchasing your home. The papers you sign will affect your life for years to come, and if there’s a problem, “I never read them” won’t make it go away. Make the time to read every word, ask questions, and make sure you understand what the intent is and exactly what you are agreeing to. Then, make a file, and keep all the documents concerning your loan application, offer, inspections, loan, and home purchase.
- Explore fully the costs of owning a home. When you purchase a home of your own, you will be responsible for more than just your monthly mortgage payment. You will have insurance costs, property taxes, homeowner association fees (for some properties), utilities, maintenance, and, alas, repairs. Those are not optional expenses; you will have to pay them month after month, year after year. Budget for those ongoing expenses, even if it means purchasing a slightly less expensive house. Use our Borrowing Power Calculator and our Mortgage Budget Planner Calculator to quickly evaluate how a mortgage might fit into your specific financial situation.
- Say yes to inspections. Your new home doesn’t have to be perfect, but you definitely don’t want it to be full of surprises. Take advantage of all inspection opportunities, even if it means spending a little extra up front. The inspector’s report revealing problems with the roof or the plumbing or the foundation could save you thousands of dollars; you may decide you’d rather not have a house with all those problems, or you may be able to use the report as leverage in negotiating a home’s price.
- Consider what’s really important to you. Before you start shopping, make a must-have list. Think about how you live and how your new home can help. Do you need a home office (or two? A large kitchen? How many bedrooms are essential for your current lifestyle, and will that be enough for the next five years? How important is a garage? A back yard? Do you need to be near work, school, or transportation? Do you need a house that’s accessible? What about space for an additional family member? As you’re considering what’s most important, also think about what kind of things would be nice, but not critical, and what you absolutely want to avoid. You might also make a list of the kind of things you’re willing to do yourself. For example, you might pay a little less for a house that needs some repairs or cosmetic care. How much are you willing to do? Home buying can be very emotional and it’s helpful to have that list to consult when you get that swept-away feeling.
We would love to help you begin your home search by talking with you about your financing options. Give us a call today.