First Time Home Buyer Tips

First Time Home Buyer Tips

Buying a home for the very first time can be exciting, overwhelming and downright scary. There are tons of places to get a mortgage and just as many people trying to sell a home. Where should a person start??? The easy answer is to start here with this massive list of first time home buyer tips designed to help you get a place of your own without making major mistakes.

Get an Agent for YOU

Some people are under the impression that an agent who has listed a home for sale will work just as hard for the buyer. While this may be true in a few situations, the bottom line is that the listing agent is getting a commission based on the sale of the home. This means it is in their best interest to get the highest price possible for the home. Getting the highest price does not always align with the buyer’s situation.

Talk to a few real estate agents and pick one to represent you in the purchase of a home. Your agent will get a share of the commission from the home sale; thus, you are not paying any extra for representation.

Get a Mortgage Pre-Approval

Getting pre-approved from a mortgage lender before looking at a single home is the best choice for any first time home buyer. The lender can review your credit history, verify your income and down payment funds, and give you a firm approval subject to an appraisal of a home. This gives you and the real estate agents peace of mind knowing that you have secured financing for an offer.

Do Your Own Market Research

Thanks to the internet, it is possible to learn a lot about a neighborhood and a home with just a few minutes worth of work.

Use the internet to look up things that will matter to you such as crime rate, distance from a neighborhood to your job, any local restaurants, closest hospital or walk-in clinic and any other item that will be important to you. It is a waste of time to look at a home that is 30 miles from your job if you hate to drive. Likewise, you may find other items that are deal breakers for you in different locations.

Make Decisions Rationally, Not Emotionally

Considering the average size of a home price, it is safe to say this will be on the largest purchases you make in your lifetime. That type of decision needs to be made with all the available facts, and not a ton of emotions.

Obviously, there is the question of if you can truly afford the mortgage payments and escrow. But there are other things like

  • Does the home have enough space for your current needs and your future plans?
  • Do you need a large yard for pets, outdoor entertaining, or hobbies?
  • Do you prefer to be close to neighbors or tucked away with more privacy?
  • Is the home plan conducive to your life and how you want to spend your relaxation time?

All of these things come in to play weeks or months after moving in, so it is wise to look at your needs, in comparison to the home, and decide what is best for your situation.

Spend Time With your Agent to Learn the Process

Schedule a time to sit with your agent and get a crash course in the home buying process. There will be several things that are new to you and you don’t want to find out about underwriting rules, appraisals, and closing costs 10 minutes before you sign the loan papers to buy the home.

The agent can explain to you about home showings, offers, counteroffers, appraisals, title research on the home and a list of other things that you will need to be familiar with in order to make the best decision. Take notes, ask questions and make sure you are comfortable before moving on in the process.

Compare Offers for Home Insurance

While it may seem that your current car insurance agent can get the best deal for a home insurance policy, sometimes this is not the case. Certain insurance agencies specialize in particular kinds of policies, making the prices more affordable. Talk with a few agents and get multiple offers before making a final choice.

Home Expenses Include MUCH MORE Than the Monthly Payment

One item that is difficult for new homeowners to grasp is the price of upkeep and maintenance on a home. Even if the home is brand new, the lawn needs to be mowed, gutters need to be cleaned and there is always the chance that something will break. Replacing a water heater or making a major repair on the heating and air conditioning unit can be a costly transaction for most people. In order to be prepared for such emergencies, it is a good idea to factor saving a bit of money each month in a savings account that is intended only for repairs or improvements.

Do NOT Try to Save Money by Forgoing a Home Inspection

It is easy to be swayed by a homeowner and their agent when they are trying to sell a home. The place will likely be cleaned, and everything will appear to be in great working condition. However, an independent home inspection may uncover a few small, normal maintenance items that can be handled by the average homeowner. Or, the inspection could uncover a major problem like a roof leak or an electrical issue that the homeowner was unaware of. Spend the extra money on the inspection so that you know exactly what you are getting.

Give Your Agent Very Specific Details

Your agent, as mentioned earlier, is working to help you find a home that you will like at a price you can afford. The agent can only do that if they have a full slate of information to work with. If you really need a 4-bedroom home but tell the agent that anything over 2 bedrooms will work, you are not giving the agent a clear picture to work with. It is much better to provide the agent with too many details rather than hold back and create frustration for you and the agent.

A 20% Down Payment is Usually Not Required

Unless you are financing half a million dollars or more, it is unusual that the lender will ask you for a 20% down payment. Several loans are designed for first time home buyers and have a much lower down payment requirement. Some locations even have down payment assistance programs that can help provide a portion of the down payment.

You Will Need Some Money for the Purchase

This may sound like a direct contrast to the previous point, but it is actually a separate point. Even if you are qualified for a no down payment loan or a low down payment loan, there will be many other items that have a price associated with them. For example, the appraisal of the home, the aforementioned home inspection, and the home insurance policy will all need to be paid at the time of closing. There will also be other items that your mortgage lender can review with you when you are pre-approved. Listen to your lender and make sure to have enough to cover the expected closing costs based on the initial good faith estimate.

The First Home You Buy May or May Not Be Your Last Home

It is impossible to predict what will happen in our lives over the next 10+ years. Family situations may change, new job offers come along and a host of other things may invade your life and make drastic changes. This is why you should get a home that meets your current needs completely. If things change, you can always sell the home and look for a different property that matches your new circumstances.

Ask the Opinions of Others

After you have found a home that you feel will meet your needs, get a friend or relative to visit the place with you. Ask the person to put themselves in your shoes and evaluate the home. They should consider everything, such as your current space needs, your hobbies & interests as well as your desire to be in close proximity to certain people or activities. Having a different person look at the place with your interests in mind may turn up some things that you may have overlooked.

It is Ok If you DON’T Have All the Answers

Some people get so overwhelmed by all the steps and information involved with a home purchase that they do nothing for fear of making a mistake. This is the wrong approach to take. Get advice from your real estate agent and your lender, make sure you understand what they are telling you, and then bounce the information off a trusted friend or relative. If the friend/relative thinks you are making a good decision, then it is time to buy a home.

Be Prepared to Make an Offer

The main reason for getting pre-approved for a mortgage is to give you the opportunity to act quickly if a home in your price range and matching your needs should suddenly come on the market. Most homes will have interest from multiple buyers. Being able to make an offer through your agent as soon as a home is available can really make a huge difference in whether or not you actually become a homeowner.

Keep Realistic Expectations

One thing that prevents many first time buyers from putting an offer on a home is an unrealistic expectation. It could be in the form of the price of the home, the size of the home or the location, but most people overestimate what they can get for their budget. Especially when they start comparing their situation to their parents or friends. Everyone is at a different place in life and at different times. It is important to talk to your agent and get a good feel for the homes that are available in your price range so that you end up getting what you expected.

Work on Focusing Down to a Few Homes

Some people start the buying process with the idea of viewing EVERY home that fits their budget. This is a major mistake. Regardless of how excited you may be, looking at dozens of homes is not a fun task. Especially if 10 of those homes are too small, or in the wrong neighborhood, or have the wrong size yard. This may sound like a duplicate of an earlier point about giving your agent specific details, but it bears repeating. Look through homes online, get details about the places and eliminate houses that have something you are firmly against.

For example, if you are married with 3 kids and you have your heart set on a 4-bedroom home, it is a waste of your time to look at a 2-bedroom home that is smaller than your current place. Use this kind of detail to review homes and eliminate contenders so that you are left with a handful of the best possible properties to review.

Pick Your Real Estate Agent Wisely

As previously mentioned, buying a home will be one of the largest transactions of our lifetime. It may take some time to go from a pre-approval with a mortgage lender to actually closing on a home. You owe it to yourself to pick a person that you get along with. Do some homework online by looking at reviews and track history of agents. Get recommendations from co-workers, relatives, and friends. Then talk to a few agents. You have your own personality and preferences, so go with the person that you like the best. Working with someone that you like will make the whole process much more enjoyable.

Summing Up 18 First Time Home Buyer Tips

This article may seem rather lengthy, but it is meant to be a good resource for buying a home. Considering the amount of time that will be invested in reviewing homes and the number of years needed to pay off a mortgage, it makes sense to get as much solid information as possible. Use this article as a guide and get out there and make your homeownership goals a reality.

Additional First Time Home Buyer Tips and Resources:
Guide For First Time Home Buyers by Jeff Nelson
First Time Home Buyer Mistakes
First Time Home Buyer Mortgage Options by Anita Clark
How To Become A Homeowner by Bill Gassett
First Time Home Buyer Mortgage Mistakes by Xavier DeBuck

First Time Home Buyer Tips

First Time Home Buyer Tips

About the author: This article on “18 First Time Home Buyer Tips” was written by Luke Skar of MadisonMortgageGuys.com. As the Social Media Strategist, his role is to provide original content for all of their social media profiles as well as generating new leads from his website.

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Filed under: First Time Home Buyers

Luke Skar

Luke Skar is the web developer and content strategist for MadisonMortgageGuys.com, serving Wisconsin, Illinois, Minnesota and Florida. Guided by his 16-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke is now the sole owner/operator of madisonmortgageguys.com. To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.

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