By Paul Mulligan
Buying a home is one of the biggest milestones in your life – right up there with marriage and starting a family. Being a homeowner has several benefits, including possibly lowering your monthly payments compared to renting and earning equity as your home value rises and you pay down your principal. The immediate benefit, of course, is the happiness and security of owning instead of being beholden to a landlord. As a homeowner, you have the ability to do what you like with pets, landscaping, renovations, and anything else that will make your house a home.
But, buying a home is also probably the biggest financial commitment you’ll make. There are many things to think about as you begin the process that can help make the process as enjoyable as it should be.
Here are several tips that can help make your first home purchase a positive experience.
Buy within your means – Many people tend to look at houses they can’t afford or that are too large. Do the math to determine how much you can realistically spend while still allowing you to meet your monthly budget needs, as well as continuing to save for retirement and other future needs – including home maintenance and repairs.
Understand all your costs – In addition to the basic monthly mortgage payments, be aware of all the other costs that may impact your budgeting. That includes property taxes and homeowners insurance, as well as mortgage and hazard insurances, depending on your financing need and location of the home. You should also expect an increase in your utility bills, including heating and HVAC maintenance contracts – especially if they were previously included in your rent payments.
Plan ahead – Don’t rush into a home purchase. Make sure you have all the information, have the financial resources to comfortably support the purchase, and are buying a home you will be happy in for many years. Try to avoid draining all your savings and make sure you still have an emergency fund to fall back on should the need arise. That’s particularly important as a homeowner so you don’t risk losing your house if you’re suddenly unable to make payments for a short period. In fact, it’s even better if you can continue to grow your savings, so you have the resources to make improvements.
Manage your credit – It’s always important to follow good spending and credit habits, but especially when you’re looking to buy your first home. Lenders will pull your credit reports, possibly several times, to make sure you are credit worthy and nothing has changed during the buying process. Make sure you pay your bills on time, and be cautious opening up any new lines of credit before your loan is approved.
The perfect home vs. the right home – It’s rare that you’ll find the absolute perfect home for all your current and future needs. Have a reasonable list of must-have features, and a second list of nice-to-haves. Look for a home that checks off the first set, and maybe some of the second (you can always make improvements to check off more items later). But don’t forget location. Your neighborhood can be as big a factor in your long-term happiness as the house itself. Do your homework and learn about the school system, commuting options and time, crime rates, tax rates, and other geographically dependent variables that may influence your decision.
Start the loan process early – As you start thinking about buying a house, don’t think you have to find the house first. In fact, you may be better off starting the loan process while you’re looking, or even before you start. Good houses can sell quickly, and once you find the house you love, you want to be able to move quickly. Being pre-qualified for a home loan may give you an advantage over other potential buyers, especially if the seller wants to move quickly.
Seek advice – Especially as a first-time buyer, you will have many questions of your own, and many more you don’t even think to ask. Contact one of our mortgage specialists, who can give help you find all of the information you need and help you throughout the process. Also ask about our first-time home buyer program, which offers:
Keeping these tips in mind will help you have an enjoyable home buying experience and avoid complications that could arise.