Buying a home is stressful - especially when it’s your first one!
We’ve compiled a long list of first-time home buyer tips in our home buyer’s guide, which covers everything from:
While our step-by-step guide walks you through the process from start to finish, there’s still a lot more to be learned. Here are 7 more first-time home buyer tips:
Know What You Can Afford
Some may believe that this is in a give-in, but it’s worth repeating. You need to know how much you have to put down, how much you need set aside for additional costs (closing costs, moving, refurnishing, emergency funds, etc.), and what your estimated monthly payments will become. Mortgage calculators are very helpful when it comes to figuring this out. The more precise your answers - the better.
Don’t overburden yourself. We know that the Seattle housing market is ranked #2 in the country for price growth in 2021 and continues to grow, but taking on too much can be detrimental to your financial wellness. Know what you can afford and work within those margins. There’s plenty more you can do several years down the road when you’re in a better financial situation.
MG Real Estate Tip: To get your mortgage insured by the Federal Housing Administration (FHA), your housing costs usually shouldn’t be more than 33% of your gross monthly income. This is a good number to remember when it comes to estimated your future monthly payments.
Buying/Selling a Home Shouldn’t Be a Part of Your Retirement Plan
It sounds like a good idea, but you shouldn’t consider the value of your home as part of your retirement. Theoretically, yes, you could sell your home and use some of that money to rent another place and live off of the profits. Many people decide against this when they get older and choose to live in the home they’d created years of memories in instead.
Real estate is a great investment, but a lot can happen between buying a home and retiring. When you’re adding up your finances while planning for retirement, leaving home equity out of the equation.
Know Your Loan Documents and Get Pre-Approved
When working with a lender, they are going to want a lot of documents for you. The most commonly requested documents include:
Collect all or as many of these documents as you can before teaming up with a lender. The faster you can produce them, the faster you can get pre-approved for a loan. By getting pre-approved, you’ll know how much home you can buy before looking for one. This knowledge is also very helpful for real estate agents and sellers looking for a serious buyer.
Check Out Multiple Homes
Our first-time home buyer’s guide has a fuLl checklist of what you should look for in a home. Even if the first house you see meets your criteria, see multiple homes - dozens, if you can.
The average buyer is expected to stay in a home for 13 years. First-time home buyers live in their dwelling for an average of 11.4 years. That’s a very long time to live somewhere, and a lot happens in over a decade of someone’s life.
Even if you’re planning on flipping and moving on, odds are you’ll be living in a home you own for at least two or three years. Make sure it’s a home that you want to live in. Out of everything on this list, this is one of the most important first-time home buyer tips, so don’t settle for anything less.
Plan Ahead and Plan Early
Most people don’t decide to buy a home overnight, and those that do usually still have to plan for one. Buying a home isn’t cheap - especially when you’re going through the buying process itself. The decision to requires a long-term plan to pay off other debts, build up your savings, and prepare for a sizable down payment. While 20% is ideal, even just putting down 5% on a home is a lot of money. If you’re buying a property for $400,000, 5% is $20,000.
Luckily, President Biden is hoping to pass some legislation that will greatly help first-time home buyers in the form of a $15,000 homebuyer tax credit. If passed, it could potential remove the barriers of many people who are trying to find a better future for themselves.
Look at Your Mortgage and Loan Options
Mortgages and loans are almost as diverse as the kinds of people looking to buy. The Washington State Housing Finance Commission (WSHFC) has a list of helpful resources and loan options. First-time home buyers qualify for special loans, as do veterans, and many others.
Here’s a breakdown of the FHA’s current down payment grants for 2021.
Know What You Want
Homes come in all shapes, sizes, locations, and prices. They also come with varying amenities, various additional fees or costs (homeowners association dues, for example), and upkeep needs. Thankfully, we live in the digital age where you can filter through and narrow in on many of these categories to determine exactly the type of home you’d like. While you’re spending X amount of time saving for one, you should consider everything need, want, and are okay with not having in a home.
The more you know about what type of home you’d like, the easier it will be for a real estate agent to find it. If they’re a good agent and your home desires are attainable, you shouldn’t have a problem getting the home you want within the budget you have.
First-Time Home Buyer Tips
These are just a few of our first-time home buyer tips. If you’d like to learn more, schedule a call with us. We’re always happy to offer our guidance so that you can be more prepared when purchasing a home.