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Thinking of buying a house for the first time?
After you’ve weighed the benefits of buying a home versus renting one, you might think that you’re ready to start shopping for your first house.
But before you jump in and become a first time home buyer, be sure to follow these 8 tips — to determine if you’re really ready to buy a house right now.
These are the most important things that you need to do (and not do!) as a first time home buyer…
8 Do’s & Don’t For First Time Home Buyers
#1 – Do know what you can afford.
Have this figure in mind before you even start looking at houses.
As a first time home buyer, it took me 2 years of on-and-off searching for homes before I truly understood the market and chose a house that I liked and could afford.
Depending on the current market, some banks may loan much more than you can actually afford — while others might not be willing to loan you as much money as you really need. Only you know what you could actually afford if times got tight.
For example, if you’re married… you should base the amount of your loan on the salary of just one working adult in the home — not both. That way, if one of you loses your job or your family falls on hard times, your house will be easier to afford (…and keep).
#2 – Do take a camera and notebook with you house shopping.
The idea is to take pictures of all the features you like about each house and write them in a notebook, along with the home’s address. Then, download the pictures, keep them in your notebook, and make notes about what you remember.
Without these tools, you wouldn’t be able to view more than 2 or 3 homes at a time without getting confused as to which house had what.
When I was shopping for my first house, I had to ask to see the same homes over and over again — just to keep them separate in my mind. We have digital technology now… use it!
#3 – Do have a sizable down payment, but don’t borrow money to make it.
The larger your down payment is, the less your monthly payments and your interest rate will be.
However, borrowing money (even from private sources) to put a down payment on your home can get you into a financial bind that you will regret later.
Here are some helpful tips regarding down payments:
#4 – Don’t let anyone talk you into getting a bigger house or a non-standard mortgage.
While most first time home buyers will be able to afford a bigger house in just a few years, it’s probably best to wait until later to buy the bigger house.
Interest-only loans and arm loans that allow you to buy a bigger house now in anticipation of a bigger salary later foreclose more than any other loans. Interest-only loans are not magic — nor are they smart!
#5 – Don’t use a lender that was referred to you by your realtor.
Don’t use your realtor’s inspector, their bank, or their attorney either.
When realtors, bankers, and other home-buying services work closely together, it is rarely to your advantage.
Kickbacks and shady deals have done more damage to new home owners than structural problems have.
Of course, there’s a big difference between a casual referral and saying, “I want you to work with this banker.”
#6 – Do get your new house inspected.
There are horror stories all over the Internet by people who skipped the inspection and lived to regret it.
- It doesn’t matter if the house is new or not.
- It doesn’t matter you’re handy and could probably repair any existing issues yourself or not.
- It doesn’t matter if the house you’re buying is bank-owned and being sold “as is” or not.
Taken a step further, you also mustn’t get too attached to your new home until after the inspection. Why? Because you need to be willing to walk (or run!) away — if the inspector finds a serious issue with the house.
Don’t let your attachment to a house and its features make you overlook a serious (or expensive) problem.
#7 – Do get private mortgage insurance (PMI).
PMI will not only to cover defects with the house and appliances — it will also to cover your mortgage should you die. (So your spouse won’t lose the house in the event of your death!)
Make sure both spouses are covered with the mortgage insurance.
#8 – Do be patient… but also firm.
Yes, closing dates will be moved and banks will ask you for the same information over and over again.
Some of these things can be avoided by doing a little research ahead of time and staying in close contact with all of the parties involved.
Changes are inevitable when you’re buying a house. But at the same time… you can’t allow the bank, home seller, realtor, inspector, or attorneys to walk all over you.
More Ideas For First Time Home Buyers
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I have been a certified tightwad since I became pregnant with my first child and decided to find a way to stay home with him. I enjoy sharing my experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.