So you’ve decided that you want to give up renting and purchase your first home but not sure where to start. After purchasing my first home in my 30s and made many mistakes during the home buying process that I’ve learned from, I thought, what would have happened if I researched more before jumping in with so little knowledge of what I was really diving into? Here are some tips to help the process of buying your first home go by a little smoother.
1) Credit|Financial Readiness
Your credit is one of the key factors that mortgage lenders use when you are applying for your 1st home. During the preapproval process, lenders are looking to see how responsible you are when paying back loans that you borrowed. You do not have to have perfect credit but you definitely want to show that you are reliable in order to be approved for lower interest rates. Think of it this way, being in the 740-799 range will enable you to qualify for lower interest rates. Now, let’s say you have experienced some setbacks (e.g. bankruptcy) along the way.
Yes! Even if you’ve been discharged from bankruptcy, you can still purchase your first home!
Definitely recommend checking your FICO for free to know your credit status from these two reliable sources: Experian and Discover. Just register and view your FICO score:)
Equally important, let’s talk financial budgeting for solo homeownership. It would be wise to factor in the following details when saving for your first home:
- 20% Down Payment/Earnest money
- Closing cost
- Home Inspection
- Moving cost
- Home Repair Fund (unless you plan to buy a new home; most likely your 1st home will need cosmetic changes/repairs)
- Regular Maintenance Fund which includes: lawn care, termite/bug prevention services [the last two mentioned are DIY as well if you have the resources and a green thumb;)], HVAC, & routine gutter maintenance
- Property taxes/Homeowner’s Insurance
- Emergency Fund to cover a possible leaky roof, storm damage, HVAC failure, water damage, etc. With the emergency calculator provided here along with tracking your spending over a few months, you will be able to plan out an achievable goal.
2) Research, Research, and more Research
You don’t have to stake out in front of your future home, but I would definitely suggest doing your research on the neighborhood, the neighbors, etc. Think about it, if you are planning to purchase your first home, you will most likely be there for at least 5-10 years. You would want those years to be as peaceful as possible. With this in mind, researching the location and the safety of the neighborhood will give you the peace of mind you will need. Ask yourself these questions as well:
What is the commute from your new home to work?
To/From the nearest hospital, supermarket, & park?
If you have children, how far is the school?
Have you checked the National Sex Offender Registry ?
These questions lead to the next tip:
3) Choose a verified realtor that has your best interest in mind
Considering that purchasing your first home is a major financial decision, you want to ensure that you will have the guidance you will need to choose your first home. Your realtor will help you negotiate offers, keep you within your budget, and meet real estate deadlines. Furthermore, it is very important to interview at least 3 realtors, ask family/friends who have purchased homes for referrals, and check social media accounts for any possible candidates so that you can see other buyers’ experience with the realtors you are interviewing.
4) Home Inspection
When I moved into my first home (which was 21 years old at the time I closed on the home) the water heater failed within the first month causing major water damage to my master bedroom closet. I was not previously informed of the risk of moving into the home with a water heater that is not up to code. The 11-year-old water heater was located in the garage in a closet that was connected to the master bedroom closet and was not sitting on a drip pan. With little knowledge at the time, I was not aware that when a water heater fails and by the water heater not being up to code that it would cause significant damage due to the missing drip pan/design flaw of the home. In my opinion, it is just as important to interview home inspectors as well and hire one that is not recommended by your realtor. If at all possible, hire two different trusted home inspectors to compare reports and make every effort to be there with a family member/trusted friend when the inspection is performed to ask questions & to monitor the process.
Provided that you have a home inspector that is extremely thorough, this will save you major financial stress after the sale is complete. Here are a few questions to ask the inspector before hiring one to inspect your home:
- What areas of the home will be inspected?
- Will you inspect for mold? (This is major. If one does not inspect for mold, definitely recommend an air quality test)
To conclude, buying your first home does not have to be a stressful experience. In fact, take a deep breath, so that you can see clearly throughout this process. Wouldn’t you rather have knowledge and wisdom while making such a major decision?
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