Like many of the best things in life, purchasing a home for the first time is extremely exciting - and also very 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% of their income on monthly housing costs. Not only does that include mortgage payments, but also taxes, insurance, and other costs. You may think you can afford a more expensive mortgage payment, but you want to avoid becoming “house rich and cash poor.” A home should be an investment that brings you happiness, not one that makes you feel financially underwater.
2. Decide How Much Work You’re Willing to Take On
Every prospective homeowner dreams of finding the perfect home that checks all the boxes on their wishlist. The reality is that most house hunters have to be willing to compromise on features and roll up their sleeves when necessary to fully realize their ideal home. Choosing between a ready-to-move-in home or one that needs work will depend on your timeline, budget, expectations, and other factors.
When budget or other circumstances leads buyers to choose a house that’s a little rough around the edges, working with an experienced design-build contractor can help turn a fixer upper into a dream home.
3. Be Prepared for Setbacks
The home buying process is a complex, non-linear experience. As you go through the necessary steps, be ready for setbacks and a fair dose of disappointment - but remain undeterred! 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. Throughout the process, try to remember that the pride and enjoyment of home ownership makes the setbacks worth it.
4. Consider the Hidden Costs
A mortgage payment is only one portion of your total homeownership costs. Research homeowners insurance providers 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 as well so you have a better idea of your overall monthly investment when it comes to your new home.
5. Ignore the Current Housing Market
Trying to predict the future value of your home certainly makes sense, but there’s no surefire way to know what your home will be worth when (or if) you decide to sell. If you fall in love with a particular house, don’t let the current housing market dissuade you from moving forward. In the end, both major home renovations and minor upgrades will have the biggest impact on the final resale value of your home.
Like most investments, your home’s value will goes up, down, and back up again. Take the time to do your research before jumping into home ownership. Seek out the advice of other homeowners in your potential neighborhood and talk to a trusted home contractor about renovation plans before you buy. It’s better to take the time upfront than to end up regretting your purchase after the fact. Good luck!