How to Buy Your First Home

Follow these 7 tips to make sure you are ready for that first purchase


Buying your first home is an adventure unlike any other. Exciting in parts, scary in others, it is not just a landmark moment, but opens the door to a new way of living. The thing is, it doesn’t have to be scary at all, once you know what’s coming, you can prepare properly and take it all in your stride. This is good for your nerves, but also allows you to enjoy the adventure more, because that first home really is something to savor. Here are 7 tips for making sure you are ready for that first purchase, take them in and know that you can handle anything that comes your way.

Are you ready to make that step to home ownership?

Money is a big part of home ownership, knowing how much you can afford is the first step to finding that perfect home to live in. It is generally recommended that your housing costs, which include your mortgage payment, insurance, property taxes and HOA, shouldn’t be more than 25% of your total take home pay.

It can be tempting to take on a bigger mortgage, thinking that in the future your income will rise, but this can be a recipe for disaster, leaving you short of cash in the short-term and very vulnerable to economic changes. That kind of pressure can be extremely stressful, you want to enjoy your new life in your first home, so avoid over extending your finances right at the start.

Get the right Mortgage

There are a number of mortgage options available for first time buyers, and which one you choose can drastically change how much your home payments are. For instance, a conventional mortgage loan with at least 20% down payment avoids the need for private mortgage insurance (PMI) thus reducing monthly payments, great if you can manage to save that 20% to put down. However, if you can’t manage that much of a down-payment, there are still options for you. If you put at least 10% down, you will save money, below that and both monthly payments and PMI will rise considerably, making your monthly costs much larger.

It’s important to remember that a mortgage is a longer-term loan, so the interest you pay mounts up. The less you put as a down payment, the more interest you will pay over the course of the mortgage. If you can keep the loan to 15 years, you will save a significant amount in interest, although you have to balance monthly costs, ask your provider for some quotes. When thinking about your down payment, always remember that the closing costs and any help with moving you may need will eat into your savings too.

Pre-Approval can help

A pre-approved loan is not a guarantee of a loan offer, but it does help you know what you can and cannot afford. A pre-approved loan will take into account your income and assets and be a good guide of the mortgage you can afford. Once you have a pre-approved letter, your estate agent can work with those figures to find the perfect home in your budget.

Find a qualified buyer’s agent

Find someone used to dealing with first time buyers who will look after your interests rather than the seller’s. Don’t be afraid or reluctant to listen to advice, the right agent can save you thousands. Because sellers normally cover all the agent commissions, you essentially get free advice too!

Check out the neighborhood

Buying a home isn’t just buying a property, it’s the surroundings too. Make sure any neighborhood you are looking at is somewhere you are happy with. Think about schools, playgrounds or other amenities that matter to you. Would the neighbors be your age group, are there resident groups and so on. The right house in the wrong place will be the wrong home, so spend some time finding the perfect area as well as the perfect property.

Take action when you find the right home for you

One of the most common mistakes for first time buyers is losing out on the perfect home because someone else made an offer while they were thinking about things or making a lowball offer. If you find a place you love, grab it with both hands. Make a solid offer and make it quickly.

You want to offer high enough that it respects the seller’s asking price, but with room to maneuver should you need. Here is where your agent’s experience will be invaluable, follow their guide, both with making an offer and responding to any counteroffer. It is here you can negotiate things that will help you as a first-time buyer, such as leaving the appliances in the property, or including some furnishings within the selling price. Remember, this offer is legally binding, so be precise with what you want to include.

Understand what happens when you are handed the keys

After the negotiations and legal details, eventually the sale completes, and you are handed the keys to your new home. The regular payments of mortgage, property taxes, insurances and HOA will be something you are prepared for by now, but owning a home brings with it more costs you need to be ready for. Maintenance, lawn care, landscaping, A/C servicing and so on all need to be budgeted for. Research providers and costs early on so you know how much these things add to your outgoings.

By working through all of these items, your journey to home ownership will be a lot smoother, and because you are prepared at every stage, much less intimidating too, leaving you ready to go out there and find the right agent and the perfect home for you.

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