One of the significant purchases a person ever makes in a lifetime is his/her home. First-time buyers find the process of buying a home challenging. Since they have no experience, they are unaware of what to prepare for.
With so many steps and requirements, how do you purchase a home without making a mistake that is costly? Fortunately, this guide is here to help you understand what to expect from the buying process. It helps you get the most out of the purchase. Read on to know more.
Key Considerations
To decide if buying a home is right for you, define your long-term goals. Maybe your goal is turning those costly rent payments into equity by adding mortgage payments. Or perhaps you want the freedom of being a property owner. No matter your goals, buying a home is a good investment. Let your homeownership goals guide you as you think through these considerations in purchasing a home:
• Type of Home
The type of residential property you buy depends on your preference: a single-family house, a townhouse, a condominium, or a co-operative. Your homeownership goals determine which option is best for you. Choosing the type of property that helps to achieve your goals is your decision.
• Features
Features cover everything from basic needs such as neighborhood and size to more minor details such as bathroom layout and a kitchen with reliable appliances. Since your home is the most important purchase of your life, do not miss this consideration. Your house needs to meet your needs and wants to the greatest extent possible.
What to Prepare
A successful homeownership experience requires attention to detail from start to end. Here is what to prepare to help you get through the process:
• Mortgage
Do your research on mortgage rates and lenders. Determine how much these great lenders are willing to lend you to acquire your first house. In many cases, sellers do not consider offers not backed by mortgage preapprovals. Because of this, be pre-approved for a loan before making an offer on any property.
• Down Payment and Closing Costs
The type of mortgage and lender that you select determine your down payment. Also, expect closing costs. These are the fees you pay to complete your mortgage. They usually vary from 2% to 5% of the amount borrowed.
What to Expect
In the home buying process, expect to:
• Hire a Real Estate Agent
As a novice, you have no idea how to go through the process of home buying. For that reason, count on a real estate agent to browse the market for homes that fit your needs, negotiate the sale, and guide you through the closing process.
Ask other recent buyers for real estate agent referrals. Meet several potential agents and ask for references. In addition, ask about their experiences working with first-time buyers in your market of interest. Also, ask how they intend to make your home search easier.
• Weigh the Pros and Cons
It is best to weigh the advantages and disadvantages of the various homes depending on your budget and lifestyle. While condominiums and townhomes are more affordable than single-family homes, they do not offer as much privacy as single-family houses.
A fixer upper (a home that needs updates or repairs) is possibly best option if you want to save money. However, repairs and remodeling require additional budgeting. You might live with the ugly wallpaper in exchange for getting into a home that is affordable in the future ―even if you cannot afford to replace it right now.
Also, consider whether you need a starter home or a permanent home for your long-term needs. You benefit from buying a home with more space if you plan on starting or growing your family.
• Have a Home Inspection
A home inspection is an in-depth examination of the structure and functional systems. Professional home inspectors look for things that go wrong with the house, so you have more confidence in your decision to buy it. The buyer is usually present at the inspection. In this way, get a better idea of the house and ask questions right away. Do your best to read the inspector’s report and ask questions if you are unable to be there.
• Negotiate!
The seller may save you money by paying for repairs in advance or slashing your final purchase price to cover the expenses of future repairs. It is also possible to negotiate with the seller to cover some closing costs. However, consider that lenders often limit the seller’s ability to contribute to closing fees.
The local market determines your negotiating ability. It is harder to find a decent deal in a market with more buyers than homes for sale.
Conclusion
Purchasing a house is tricky for first-time buyers to navigate. To help you in getting the most out of your purchase, use this guide. Here, you learn what to prepare and what to expect during the buying process.
