10 Tips for Buying Your First Home

November 23, 2010 / by / In

Buying your first home is an exciting and complicated process. New home buyers are usually the ones that make the biggest mistakes and get in over their heads. But, with good research and trustworthy advice, you can be confident during this life changing decision. Here are 10 tips that you can use when buying your first home. (Image Source)

  1. Learn From Experience: Go out and talk to other people who recently purchased a home for the first time. They now have hindsight on what they did right, could have done better, and shouldn’t have done. They might not be a professional, but at least they went through a very similar experience recently, which is especially important during these difficult economic times.
  2. Attend a Home Buyer Seminar: There is a seminar for everything in today’s world, including a first time home buying seminar, probably close to where you live. You can normally find a free seminar put on by a local non-profit or your city that will help you learn what is involved in buying a home and what mistakes to watch out for. You are much more likely to find that perfect home if you are an educated buyer, so study hard.
  3. Making a Budget: You probably have already done a basic review of your finances if you are thinking of buying a home, but you really need to be honest with yourself when it comes to what type of house you can actually afford. Try and get pre-qualified for a home loan from your bank so you know in advance what type of money you can spend on a home. Don’t forget to take into consideration a 20% down payment and the monthly mortgage payment before you make any offers. There are several other costs of owning a home besides the monthly mortgage payment. Plan into your budget expenses such as utilities, heat, property taxes, repairs, insurance, landscaping, etc. A good way to judge the overall costs is by examining the previous owner’s actual monthly expenses. You don’t want to realize after the fact that you can’t afford the home you are living in.
  4. Additional Costs: Most home buyers forget about the extra costs involved in searching for and buying a house. Aside from the down payment, you will probably encounter costs such as a home inspection fee, loan origination fee, prepaid interest, application fees, appraisal fee, survey, title search and title insurance, first months homeowner’s insurance, recording fees, and attorney fees. Depending on the city, you may also need to pay transfer taxes. It is a good idea to count on fees adding an additional 3 to 8 percent to the total purchase price.
  5. Keep Your Options Open: It can be extremely beneficial to buy a home that is in your budget, but not ideal because you can find remodelers to do the work for you! If you are willing to wait a little longer for your perfect home, you can save a bundle by buying small and renovating big. In the end, you’ll get exactly the home you were hoping for, it just might take a little bit longer!
  6. Pick the right city: A lot of people forget to think about the advantages of owning in one city over another. Almost every city is in a financial crisis right now, but several show promise in the long term that will pay off for homeowners. Several cities that look good for first time home buyers right now are Los Angeles, San Diego, Denver, Boston, and Phoenix.
  7. Choose a Neighborhood: Simply picking a good city doesn’t help narrow down exactly where you want to live. Each of those cities above has bad neighborhoods that you want to steer clear of. When deciding on what is important to you in a community, take into consideration crime rates, taxes, mass transportation or access to freeways, schools, and local zoning laws.
  8. Hire a Real Estate Agent: First time home buyers often are confused with the entire process and don’t know where to start. When you hire a professional, you will have someone to not only hold your hand along the way but that will help you find homes that fit your preferences. You can spend hours scouring the web for homes by yourself, or let the agent send you a list of homes that are close to what you are looking for. Another benefit of hiring an agent is that they usually will have access to homes that have not yet hit the market. In the end, hiring an agent will save you time, money, and your sanity.
  9. Finding a Home: Choosing the right city, neighborhood, and then a home is a long process that shouldn’t be taken lightly. Either work on your own or with a realtor and tour several homes at a time. You will start to figure out what is important to you, what you like in a home, and the neighborhood that works best for you. Once people have made a decision to buy a home, they usually spend 8 weeks looking around and doing research to find where they want to live and what they are looking for. Then after they have narrowed it down, it usually only takes a few home tours before they find that perfect first home.
  10. First Time Home Buyer Assistance Programs: The weak economy is helped every time someone purchases their first home. Many local and national programs are available to help and motivate people into taking that step. As long as you qualify, you may be offered lower interest rate loans, low down payment options, and down payment assistance. Even people without perfect credit still have access to the Federal Housing Administration’s loan program that offers lower down payments.
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