Three Important Tips for First Time Buyers
Buying a home is a major life milestone – you feel like you’ve really made it when you become a homeowner. So many people are eager to end the relationship with their landlords and stop throwing rent money away. Owning a home gives you instant equity, a major investment, and a sense of comfort.
Owning a home is a really big step – one that takes a lot of time and planning to make a success. Just because you think you’re ready to own a home, doesn’t mean you really are. Even, if you think you’re ready to take on home ownership, you still might need a few tricks for navigating the real estate market
Read on to learn a few things first time buyers often overlook:
1. Get real with your costs
You may be paying close to $1000 a month in rent while your friend pays a $700 mortgage each month. When you see these numbers, owning a home seems like a no-brainer. Why keep throwing money into an apartment? You’ll never see the return on your investment. These are the things first time homeowners use to justify jumping into buying a home. You never want to throw money away, but have you really considered the costs of home ownership?
Home ownership comes with lots of bills you’re not required to pay when you rent. You’d be facing home insurance, trash, water, sewer, property taxes, much high utilities, and even homeowner association fees. New buyers tend to focus on the reasonable mortgage alone, and forget about all of the other costs associated with owning a home. If you can’t afford these additional costs plus a mortgage, keep renting and saving money.
2. Know exactly what you can afford
You’re probably well aware that you should be pre-qualified before you really start looking for a home. When you get pre-qualified, you’re getting a very high-level idea of what you can afford. Your lender will look at your income vs. debt to see what type of mortgage they think you could take on. But, being pre-qualified does not mean you are eligible for a home loan when the time comes to really apply.
Being pre-qualified will only take you so far. Lenders can only use the information you give them to determine how much you’re pre-qualified for. To be totally prepared, you should get pre-approved for a loan instead. In the case of pre-approval, your lender digs through your finances and credit history – coming to a real, solid number. Being pre-approved is so much more valuable – you won’t waste your time looking at houses you can’t afford. And if you do find a house you love, you won’t waste valuable time on this step later.
3. Don’t get emotional
One of the most dangerous things you can do when you’re looking at houses it to lead with your heart. Making decisions based on how a house makes you feel usually isn’t a good decision. First time home buyers can be distracted by upgrades, remodeled floor plans, and homes with lots of characters. They can also be lured by the grandeur of a big, luxurious home. It’s important to tour every home with a serious, even slightly skeptical, eye. You need to know exactly what you want and what you can afford. Going over budget isn’t as simple as it may seem when you’re locked into a 30 year mortgage.
And, if you can’t find a house that’s exactly right for you, don’t let your desire to buy a house outweigh what you’d actually be getting. You don’t want to end up with a house you’re not comfortable with just for the sake of owning a home. There’s no shame in saving your pennies for the perfect home – maybe even to build a custom home. After you save, you can look for land for sale to build your forever home. If you live in PA, there are plenty of plots of land for sale that would work great for a dream house. Why not have your huge investments pay off for something you really, really want?