Life is full of exciting firsts. Your first word. Your first day of school. Your first love. Your first job. And now, your first house.
Whether you want to move out of your parent’s home for the first time or own a home after years of renting, purchasing your first house is a big step. It takes a lot of preparation, but it’s absolutely worth it.
There are a lot of things to consider before you make the leap, and in this article, we’ve outlined the top things you should know before you buy your first home.
1. You should use a realtor that you trust
You might be hesitant to use a realtor because they get a cut of the sales price of the home. However, the seller, not the buyer, pays the commission.
It’s important to understand that the listing agent (who represents the seller) protects the interest of the seller, not the buyer. To look out for your interests as a buyer, you should find a realtor that you trust. Your realtor can help guide you through the buying process – from navigating inspections to negotiating a price.
2. Remember that you can negotiate the home buying contract
When you buy a house, it may seem like there are endless papers to sign. Many of those papers can look like the standard home-buying contract with no room for negotiation, but that isn’t true. In fact, contracts are meant to be negotiated.
Don’t feel pressured to sign a standard agreement. If you want more time to review the inspection results or want to make a purchase subject to mortgage approval, you can make that a part of the deal. This is where a trusted realtor comes in!
3. You shouldn’t just buy for the life that you have today
Buying a home will be one of the biggest financial commitments that you make in your lifetime. Before you agree to buy that dream house, take a step back and consider your long-term plans.
Are you planning on getting married? Having kids? Are you looking to stay at your current job? Your home should fit your life now and in the future.
If you aren’t sure that your house will still be the one for you in a few years, it might be better to continue shopping.
4. Think about commitment
When you purchase property with someone who is not your spouse, you may want to consider having a plan just in case the romantic or business relationship ends. It is a good idea to have some sort of agreement in place with respect to titling, mortgage payments, liabilities, and repairs before you purchase a house.
5. Look beyond the paint
Is there that one room in your dream house that you are already dreaming of renovating? It’s important to remember that it is fairly inexpensive to fix cosmetic issues, like paint or wallpaper, but overhauling the kitchen or bathrooms can be expensive.
Make sure to factor in the cost of both materials and labor for any repairs and updates. High renovation costs don’t necessarily mean that you should give up on the house, but you should factor them in when you’re determining if you can afford to buy or not. It would be a shame to purchase a home at the top end of your budget, but not have any money leftover to customize it how you want.
6. Don’t get stuck on the purchase price
The purchase price is just one piece of the puzzle when it comes to home buying. It is important to consider all of the costs associated with your potential new home. These costs can include insurance, property tax, and homeowner association fees. Depending on where you live, these can really add up.
And what about home improvements and repairs? Those cost money too, so you should factor them into the overall cost. When you’re visiting homes, inquire about the upkeep for extras such as a swimming pool, detached garage, or septic system.
7. Buy a house that you know you can afford
Just because you can get approval for a $500,000 mortgage doesn’t necessarily mean that you actually want to own a home that’s that expensive. Ultimately, only you can decide what amount of money you’re comfortable spending on your housing each month.
So, what ratio of your income should you use to figure out what you can comfortably afford? Some lenders suggest that you can afford mortgage payments totaling 1/3 of your gross income, while others suggest that the 30% should include all housing-related costs, including mortgage, taxes, and insurance. There are a number of factors to consider, such as your projected income, interest rates, and the type of mortgage. If you’re struggling to figure out what the true cost of a home would be, reach out to a professional loan coach to help you sort through it.
Are you ready to own your first home?
Life is full of firsts, and buying your first home should be an exciting occasion. When you’re ready to consider buying your first home, reach out to Lincoln Lending and let us help make your dreams of homeownership a reality.