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March 10, 2014
Buying a home seems like a pretty straightforward activity. You look around for a property you love, make an offer and then move in and begin your life as a homeowner. This is kind of true, but once you’ve been through the process you realize those real estate reality shows on television don’t really do the process justice. And the effect is even greater when you are purchasing your first home.
When you are going through the process for the first time, it seems as though a surprise waits around every corner, and if you aren’t prepared you could end up with a house you can’t afford, don’t really want, or worse.
Here are some tips that will help you along.
How Much Can You Afford?
The money questions are always front and center when you set out to buy your first home. It’s important to know how much you can afford in terms of monthly payments, and also whether you’re pre-approved for the amount you feel you can afford.
Keep in mind that just because you’ve worked it all out and think you can afford a certain amount, doesn’t necessarily mean a lender will see it the same way. Sometimes, seeking the help of a mortgage broker over a traditional lender makes more sense when you’re immersed in the pre-approval aspect of the purchase. A mortgage broker will shop you around to different lenders and find the right mortgage for you, where a bank can only offer the products and programs available at that specific bank. Using a broker may increase your chances of being pre-approved for your dream home.
Needs vs. Wants
People have trouble with these all throughout life, and it can be especially true when searching for your first home. The inground pool and newly finished basement are great features, but they may not be practical. When you’re able to identify your needs vs. your wants in the home buying process, it is easier to stay within budget and to make an offer.
Besides, just because you might have to separate needs and wants now doesn’t mean you can’t get all those features later. It’s always possible to do renos and build on and add a pool, and if you have to sacrifice a little now to make the deal work, there’s no need to despair.
Offering the Right Amount
When you find that house that really gets your blood pumping, the strategy part begins. Now is the time where you make an offer, but you want to make the right offer or you could miss out or end up paying too much. If there are multiple offers on the house, yours has to be more attractive than the others, but not so attractive you end up paying $10,000 or $20,000 more than necessary. A good agent or broker will help you make an offer that gets the result you want. They know how long the house has been on the market, the asking price compared to others in the area and how much room there is for negotiation.
Get a Home Inspection
A home inspection is a must for anyone buying a home, and is definitely worth mentioning for first time home buyers. A home inspection by a licensed home inspector will weed out serious structural issues and other problems that could end up costing you a lot of money in the future.
Scores of homeowners have horror stories about what can happen when you don’t bother with a home inspection. Most people know someone who “knows what to look for” so they skip the real thing, but it can come back to haunt you. In some cases, major renovations are required or the discovery of asbestos or another dangerous material requires the family to have to leave until it’s fixed and given the thumbs up. It seems like an unnecessary expense, but this is your house you’re talking about.
Don’t Sign Unless You’re Sure
When the mortgage has been approved, the offer accepted and the home inspected, the excitement starts and you may be more than happy to sign just about anything that is placed in front of you. You will have to sign papers and documents before you get the keys and the house is yours, but don’t sign anything unless you’re sure of what you are signing.
In all likelihood, no one is going to try anything sneaky with you, but have a lawyer, agent or broker read over all the documents before you offer up your signature. That’s what they are there for, and it’s always better safe than sorry.
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