Like many of the best things in life, purchasing a home for the first time is extremely exciting—but also stressful. But for those that are tired of renting someone else’s space, ready for the responsibilities of homeownership, and financially prepared, buying a home is a smart decision. As you start the home buying process for the first time, consider the following tips.
1. Be realistic about your budget. Major lender Fannie Mae recommends that homeowners do not exceed 28 percent of their income on monthly housing costs, including the mortgage itself, property taxes, and insurance. You may think that you can afford a home that is more expensive, but you want to avoid becoming “house poor.” A home should be an investment that brings you happiness and not one that makes you feel financially underwater.
2. Decide how much work you want to take on. Unless you’ve custom designed it from the foundation up, finding the perfect home that fits each of your expectations is nearly impossible. Home shoppers must weigh the choice to buy a ready-to-move-in home or one that needs work. The choice will depend on your time line, budget, expectations, and other factors. You can contact a professional contractor like Murray Lampert Design, Build, and Remodel for quotes and advice if you’re not sure if a fixer-upper is right for you.
3. Be prepared for setbacks. There are many, many steps in the home buying process and it is not a linear experience. As you go through the motions, be ready for setbacks and even for some disappointments—but just don’t let them get (or keep) you down. Buying a home is a huge commitment, so certain protocol (e.g., inspections) must be followed to ensure that you are really getting the most for your investment.
4. Consider the hidden costs. A mortgage payment is only one portion of your total homeownership costs. Get a quote for homeowner’s insurance and obtain copies of previous property tax statements. You should also find out if there are any other community costs, like an HOA fee. If possible, get an estimate of utility costs too so you have a better idea of your overall monthly budget when it comes to your home.
5. Ignore the current housing market. Trying to predict the future value of your home certainly makes sense, but there is no surefire way to know what your home will be worth when you decide to sell it. If you like the features of a particular house and surrounding property, do not let the current state of the housing market talk you out of it. In the end, the things you do to improve your home through renovations and upgrades will make the biggest impact on the final resale value. Like many investments, value goes up, down, and up again. Take the time to do the research before jumping into home ownership. Seek out the advice of other homeowners in your potential neighborhood and talk to a contractor about renovation plans first. It is better to take the time upfront than to end up regretting your purchase after the fact. Good luck!