Here are eight tips all homeowners, especially first-timers, should keep in mind when buying their homes.
- Credit Fix-Up
Credit scores, for better or for worse, will have a large impact on which homes are available to prospective buyers and how much they’ll end up paying. The first step should be to get that score as high as possible. At least six months (preferably more) before even looking at getting financing for a home, home buyers should start repairing their credit (if necessary) by paying off old debts and being extremely careful to pay all bills promptly and on time.
Six months may seem like a long time, but this is important. Buying a home is an arduous process that rewards patience and deliberation. If someone can’t afford to pay their bills, then they probably can’t afford a house either.
- Always Shop Around
When making a new big purchase, such as a car or apartment, is it wise to accept the very first offer received? Of course not. Purchasing a home is no different.
Buyers should look at a variety of homes in several different markets whenever possible. They should also shop around for financing; separate institutions may offer somewhat different interest rates and other qualification requirements. It is impossible to know the best deal possible until at least a few are on the table, so buyers should never hesitate to shop around.
- Get Pre-Qualified
Potential home buyers can be pre-qualified for financing, which will help them go into the negotiating room on equal footing with home sellers. They will know going in exactly how much they can afford, and the buyer will know that their offer is serious and backed with real money.
- Have a Goal
Prospective buyers should ask themselves an important question at the beginning of this endeavor: Why am I buying my first home? To rent out? Will it be a starter home to live in for just a few years until my finances are in better shape? Or is this the dream home where I’ll spend the rest of my life?
Knowing the answer to that question is important during the home buying process. If the plan is to stay in the home for a very long time, a longer term and fixed-rate mortgage are probably the best bet, while for a starter home it may be better to find an adjustable rate. A good real estate agent can help figure out which is best, which is why all buyers should…
- Find an Agent
Just like the Hollywood stars, home buyers need an agent to help protect them and ensure they get the best deal possible. Family, friends, and Google can all be good sources for recommendations of local agents.
Also like Hollywood stars, buyers need to be careful that their agent isn’t taking advantage of them. It is wise to ask prospective agents for their sales history, especially of homes in the target market/price range. Searching the internet for agent reviews is also a good strategy.
- Know the Market
This is crucial for paying the right amount for any home. Negotiation is part and parcel of home-buying, and negotiations are almost always won by the party with the most information.
Buyers must look at what similar homes in the same neighborhood are going for, as well as neighborhood demographics. Have home prices increased or decreased in the past several years? Are they likely to continue that trend?
Knowing all of this information will help home buyers know exactly what to offer when they find a home that might be “the one.”
- Inspect the Home
It is understandable that once a buyer finds that special house, they’re going to want to move in as soon as possible. However, it is best to resist that urge.
Before closing, savvy buyers should hire a professional home inspector to ensure that they’re not buying the home version of a lemon. It is worth the expense, especially if the inspector finds major issues like faulty electricity or an unstable foundation that the homeowner would’ve been on the hook for if they’d waited.
- Remember No House is Perfect
It’s not something most agents or sellers will admit to, but there is no home ever built that is perfect. There will always be another house that is bigger, more spacious, better situated, gets more southern light, etc. The goal for buyers shouldn’t be to find the perfect home, but to find the home that they can build the perfect life within.
Maybe they’ll be happier in a slightly smaller home with a mortgage that’s a couple hundred dollars cheaper than the bigger home they were considering first. Maybe the home they think is their dream home is too far from family or work, and the extra hundred square feet will get old after a few months.
Buyers should beware of chasing a mythical promised land – it’s not out there. Instead, people would be happier finding a place they can afford, a place where they can be happy, and then taking the plunge. Homeownership is one of the largest steps most of us will ever take in our lives, but overthinking it can be as damaging as under-thinking it. Many of us find out after becoming homeowners that a house is only made a home by the people living in it.