While there is room for economic improvement nearly everywhere, first-time home shoppers may find the market approachable with good values and low mortgage rates to be had. The following are some considerations and tips as you set out to buy your first home.
Know Your Market
Markets are different across the country. What goes on in one city may differ greatly from another city. The national market information you hear about is simply a compilation of all areas. You need to examine data for your community.
A real estate agent can offer comps on homes that recently sold in neighborhoods of interest to you. You can also learn about the market by visiting Trulia and Zillow, independents sites that feature home prices, availability and trends. Understand your market and you’ll know what you can afford.
Budget and Approval
Determine how much home you can afford and learn about your borrowing options. Learn what your credit score is and review your three credit reports. If you are experiencing credit problems, fix these first. Home buyers with less than stellar credit will find it more difficult to qualify for a mortgage.
Even before you shop for a home, shop for a mortgage. Compare fixed- and variable-rate mortgages and learn if you qualify for subsidized loans. Speak with a mortgage provider and apply for mortgage approval before you start your home search. Home shoppers with advanced mortgage approval have an advantage over buyers that still must shop for a mortgage.
Home Requirements and Nice to Haves
With your eye on a specific neighborhood and your mortgage approval in hand, you’re ready to work on your home requirements. That may mean a three bedroom home with two full baths, a porch, swimming pool, and a detached garage. Maybe you have your sights on something larger, perhaps a 5 bedroom, four bath home topping out at 3,000 square feet.
Buying your first home means quickly realizing what you can afford and what the market offers. There may be a huge difference between the two. Thus, your expectations must be managed. It is at this time that some first time homeowners are shocked and even discouraged when they learn what they can really afford.
Looking Beyond the First
Your first home is just that: your first home. Likely, you won’t be spending the next 30 to 40 years in it even if your mortgage is for that period. Most people buy a home, stay in it for a few years, then move. Consider that your first home is a steppingstone to your next home.
Then again, you may love your home, your neighborhood and your community. Instead of moving, you may find yourself expanding your home to accommodate your changing needs including your growing family. Consider whether the starter home you are buying can later be expanded. Talk with an architect to get some ideas.
First Home Considerations
No matter what home you choose, there are other points to consider including: property taxes, homeowners association dues (if any), insurance, money for repairs and maintenance. Keep these points in mind and you’ll have a good idea for what home you can afford.
See Also — Advice for First-Time Home Renovators