You’re a first time home buyer and are ready to invest your hard-earned money in a house and make it your own. Before you run out and drop your cash on the first house that tickles your fancy, you might want to consider these things first:
1. Unless you’re wealthy, you will need a mortgage.
Before you approach a mortgage specialist, financial experts recommend that you decide how much you want to spend each month on your payments. You should create your own budget and know your limits. As a first time home buyer, realize that you may experience a sizeable change in your monthly payments so know the amount that you are comfortable living with.
2. Research the market and identify the areas that you would like to look at.
Write a list of the “must-haves” for your home. Make a second list of your “would-be-nice-to-haves”. These lists should include the size, age or style of the home and naturally, the price. Think about how you live and what makes you comfortable. Some people must have room to entertain and a large kitchen, while others dine out and open a can of soup occasionally.
- Take the time to find a competent, reliable real estate agent
and discuss your expectations briefly and honestly. If you do not have a realtor, ask friends and family for referrals and make sure that they know the areas that you are thinking about buying in.
3. Our real estate market is fast and competitive.
You need to have everything in place so when you find a home you like, the sale can go through quickly, and without problems. Getting pre-approval is essential as it helps you determine your budget and what type of mortgage is right for you. It also guarantees you the best interest rate available to you for a specified period of time.
4. Pre-approval is recommended well before you start actually looking for homes.
It involves a review of your finances, including your credit report. If there are problems or errors on your credit file, and this does happen, they will need to be addressed. Even if your credit is less than perfect, you can get a mortgage through an alternative lender, but you want to know all of this before you attempt to buy.
Keep in mind that your pre-approval amount is the maximum amount you can borrow based on your income and the projected expenses for a house. You will also have to take into account all of the money you need for closing costs, emergencies, renovations and running your new home. The last thing that you want to do is to take on payments that are too high to handle.
5. It is next to impossible to find a house that will have everything that you want.
This is why your “must-have” list is so important. First, consider the neighbourhood. You will have to live in that neighbourhood for many years to come and even if it is a “developing” area it may not develop until years later. Can you live with that? Chances are you are better off buying a less expensive home in a better neighbourhood. You can always improve it while you are living there, but you can’t change the neighbourhood.
Second, you have to be realistic about your expectations. You are a first time home buyer, so everything will not be perfect. You will want to make sure that the layout is pleasing and the structure is sound. Don’t consider properties that require extensive renovations, unless you have experience with this. Employing contractors is time-consuming and probably more expensive than your “guesstimate”. Most first-time homeowners can cope with painting, changing light fixtures and perhaps laying a laminate floor. Anything more is likely asking for trouble.
Look at the functionality of the home and not the frills and you will have a better chance at finding a first home that will fulfill your needs and leave room for you to imprint your own style on it over time.