Buying a first home can be an exciting yet confusing and stressful
process. Many would-be buyers are understandably nervous at the prospect of
making the largest purchase of their lives. Rather than diving in and hoping
for the best, you should prepare carefully before you begin the house search.
Following are some useful tips that will help you turn
an overwhelming and intimidating experience into an exciting search that yields
the right home!
1.) Establishing a Realistic Price Range
A common mistake among first-time home buyers is
purchasing more house than they can afford. You should not rely on banks to
determine what you can comfortably spend on a new home. Banks are adept at
determining the amount of monthly debt in the form of mortgage, insurance,
credit card, student loan and auto loan payments. They have no way of knowing,
however, what you spend each month on groceries, entertainment and utilities.
You should make a list of all monthly expenses,
excluding rent or your current mortgage payment. Whatever is left after monthly
expenses is the amount available for a mortgage payment and housing expenses
such as taxes, insurance and home maintenance. Careful consideration of your
budget saves time by weeding out homes that you cannot afford and guards
against overspending. Use this
information when shopping for a mortgage.
2.) Seeking Pre-approval
Getting pre-approved for a mortgage prevents a deal on a
dream home from falling apart due to failure to obtain financing. You should
compare loans from several lenders to see which one best suits your needs. A
pre-approval letter will give you some power to negotiate on a home’s price
because the seller will view a pre-approved offer more favorably than an offer
that comes without lender pre-approval.
Keep in mind that pre-approval is different from
pre-qualification. During pre-qualification, the lender estimates what you can
afford. Preapproval is a more involved process in which the lender looks at
your credit report and performs an extensive financial background check. At
this point, you will get a good idea of the mortgage interest rate as well.
The offer that you make should still contain a mortgage
contingency clause. This will
protect you should there be a change in financing options during the time when
you will have to secure a mortgage.
3.) Setting Priorities
You should compile a list of what you need and want in a
house. Needs might include the number of bedrooms, square footage, high-quality
schools and commute time. These needs are aspects of the house that either
cannot be changed or cannot be changed without substantial cost to you.
Wants, on the other hand, are something you would like
and that can be changed. Wants may include a pool or hot tub, landscaping,
finished basement or hardwood floors. Making a list of wants and needs helps
you focus on what is really important in a house, narrowing the list of
prospective homes. Ideally, the new house will include all of the needs and a
few wants.
4.) Choosing the Right Neighborhood
Crime statistics, insurance rates, property taxes and
school quality are important considerations for you. Because the neighborhood
makes up a large part of a home’s value, take your time to find exactly what
suits your needs. You should also consider job commute, traffic during rush
hour and proximity to amenities such as shopping, churches and libraries.
Driving through the neighborhood at various times during
the day and night will provide a more complete picture of the location. Don’t
forget to talk to potential neighbors, who can be a good source of information
regarding the neighborhood and residents in the community. Information on the
town and neighborhoods is often available on-line - don’t depend solely on the
information supplied by your real estate agent.
5.) Finding the Right Home Inspector
You will also need a professional home inspection. Massachusetts
law requires that your real estate agent provide you with a list of licensed
home inspectors and information on the process. Even new houses may present costly problems evident only to
a home inspector.
You should talk to several inspectors before hiring one.
You should ask about the inspector’s qualifications, scope of the inspection,
how long it will take and the nature of the report you will receive at the end
of the process. Main areas covered by the inspection should include quality of
construction, integrity of the foundation and condition of plumbing,
electrical, heating and cooling systems. If the inspection uncovers serious
issues, such as cracks in the foundation, you may decide to back out of the
contract or ask the seller to repair the problem.
6.) Have patience
It took some time to get to where you are able to go and find that first
home. Be patient. Look carefully. When you find that ideal home for you,
you’ll know it and be ready. Don’t
lose heart if your first offer is not accepted, or the seller accepts a
different buyer’s offer. Keep at
it. It will happen. Owning a home is still one of the best
investments you’ll make over your lifetime. It’s one of the few investments you can sleep in!
7.) Hire a professional
real estate agent
Helping buyers and sellers is what we do, every day. We know the neighborhoods, the values,
the market, and we want you to be happy, not just today but for years to
come. Referrals from happy clients
are the best way of growing our business.
