Here’s what every first-time home buyer needs to know to dive into house hunting with confidence—and with as few curveballs as possible.
1. How Much Home Can You Afford As A First-Time Home Buyer?
Homes cost a bundle for most of us, so odds are you’ll need a home loan along with a hefty down payment. Still, the question remains: What price home can you really afford? That depends on your income and other variables, so punch your info into the Home Place Mortgage Calculator on our website: http://www.homeplace.pro/mortgage-calculator/ to get a ballpark figure of what you can manage.
In general, experts recommend that your house payments (mortgage, maintenance, taxes) should not exceed 28% of your gross monthly income. So, for example, if your monthly (before-tax) income is $3,000, multiply that by 0.28 and you’ll see that you shouldn’t pay more than $870 a month on your home.
But online calculators give just a ballpark figure. For a more accurate assessment, head to a lender for mortgage pre-approval. This means the bank will assess your credit history and other factors, then tell you whether you qualify for a loan, and how much. Mortgage pre-approval also puts home sellers at ease, since they know you have the ability to back up your offer. Check out the links to local banks and financial institutions on the Home Place website: http://www.homeplace.pro/banks/
2. Pick The Right Real Estate Agent – A Home Place Sales Associate
You buy most things yourself—at most, sifting through a few online reviews before hitting the “Buy Button.” But a home? It’s not quite so easy. Buying a home involves a lot of regulations and paperwork, like transferring of a deed, title search, and plenty of other details, including disclosures, inspections, city codes, neighborhood covenants, etc.
And did we mention there’s a whole lot of money involved?
All of which is to say, you will want to have a trusted real estate agent by your side to explain the ins and outs of the process and help you make the best decisions at every step. There’s no place like home, and no one will take better care of a buyer than Home Place Real Estate. Our Sales Associates all live and work here, and, most grew up here, and know it very well. “Finding a Realtor is not hard, but finding one that can navigate with you smoothly through the process and who is best-suited for you and your purchase can be a challenge,” Loretta Bush, Owner/Broker, Home Place Real Estate said. “When we commit to you at Home Place, we will finish what we start with the quality you would expect from a professional REALTOR®.”
You can search on the Home Place website and review the biography of each of our licensed Sales Associates: http://www.homeplace.pro/agents/ as well as listing from MLS Boards in the area and the state and much more.
3. Know There Is No Such Thing As A Perfect Home
It’s your first home—we understand if you’ve dreamed about the ideal house and don’t want to settle for anything less. We’ve been there! But understand that real estate is about compromise. As a rule of thumb, most buyers prioritize three main things:
Realistically, you can expect to achieve only two of those three things. So, you may get a great deal on a big house, but it might not be in the best neighborhood. Or you may find a nice-sized house in a great neighborhood, but the price is a bit higher than you were hoping for. Or else you find a home in the right neighborhood at the right price, but it’s a tiny bit, um, cozy.
Such trade-offs are par for the course. Finding a home is a lot like dating: “Perfect” can be the enemy of “Good.” Or even “Great.” So, find something you can live with, grow into, and renovate to your taste.
4. Do Your Homework
Once you find a home you love and make an offer that’s accepted, you may be eager to move in. But don’t be hasty. Don’t purchase a home without doing your due diligence and add some contingencies to your contract—which basically means you have the right to back out of the deal if something goes horribly wrong. The most common contract contingency is the home inspection, which allows you to request a resolution for issues (e.g., a weak foundation or leaky roof) found by a professional.
Another important first-time home buyer addition: a financing contingency, which gives you the right to back out if the bank doesn’t approve your loan. A pre-approval makes this possibility much less likely, but a pre-approval is not a guarantee.
You also might want to consider an appraisal contingency, which lets you bail if your lender values the home at less than what you offered. This will mean you will have to come up with money from your own pocket to make up the difference—a tough gamble if cash is already tight.
5. Know Your Tax Credits
The first-time home buyer tax credit may be no more, but there are several tax breaks new homeowners may not be aware of. The biggie: Mortgage interest deduction is a boon for brand-new mortgages, which are typically interest-heavy. If you purchased discount points for your mortgage, essentially pre-paying your interest, these are also deductible. Check with your Realtor and local government to see if tax credits apply to you.
Home ownership is the “American Dream:” and you will find that at Home Place Real Estate, we work very hard to make your dream of being a first-time home owner come true.