There is nothing more exciting and daunting than finally being able to afford your first home. The idea of owning your own home is idyllic and real estate is always a sound investment, but are you sure you’re ready to take this step. Whether you’re still feeling a bit nervous, or you’d like some more advice, here are some tips for all first time home buys.
Save as much as you can
Although a down payment can be as little as five percent, the more you have the better your mortgage rate will be. Also, it helps to have some left over to start a nest egg. Remember, if something breaks it’s now your job to fix it, so always have something set aside for big repairs.
Get some help
Depending on where you live, there could be government schemes in place to help you buy your first house. If not, you should seek out a reputable mortgage lender to pre-approve your mortgage before you talk to an estate agent. All your debt payments plus your new housing expenses – mortgage, homeowners association fees, property tax, homeowner’s insurance, etc. – shouldn’t equal more than 43% of your monthly gross income, according to the federal housing administration (FHA).
Make an offer
When we buy houses, we’re expected to make an offer as soon as possible. Don’t be pressured into making a bigger offer than you can afford – after all, you’ll be the one suffering when you can’t make ends meet. Your real estate agent will help you decide how much money you want to offer for the house along with any conditions you want to ask for, like having the buyer pay for your closing costs. If you reach an agreement, you’ll make a good-faith deposit and the process then transitions into escrow, which is a short period of time (often about 30 days) where the seller takes the house off the market with the contractual expectation that you will buy the house – provided you don’t find any serious problems with it when you inspect it.
Get an inspection
Don’t buy a house without knowing what’s going on in the foundation. If the home inspection reveals serious defects that the seller did not disclose, you should be able to rescind your offer and get your down payment back. Or, if the damage isn’t too off-putting, you could negotiate to have the seller make the repairs or discount the selling price. Just remember, if the same issues are likely to come up again in the future, you’ll be the one who has to pay for the repairs.
Once you have the house
The work doesn’t end once the agent hands you the keys. You’re a homeowner now, so it’s your responsibility to keep the house in good condition. You can either keep saving money and spending it on repairmen, or do the repairs yourself. Remember, home improvements could increase the value of the property if you ever decide you want to move.