Buying your first home can be overwhelming and stressful if you don’t have any guidance, which is why I’m outlining my top 5 tips for first time home buyers in this article! Together, I can help you navigate the home buying process in a stress free process that allows you to feel confident and comfortable with your home purchase.
Here are my top five tips for first time home buyers:
1. Start by getting pre-approved.
Getting pre-approved for a mortgage has many benefits – but one major benefit is that it shows that you are a serious buyer, which can be very helpful in a competitive market. This can allow you to negotiate the price of your home with more confidence, and it can help make for a smoother transaction. When asked about pre-approvals, Redfin’s chief economist Nela Richradson says “That is almost as good as cash”.
2. Have a clear understanding of what you can afford.
Before purchasing a house, it’s important that you sit down and thoroughly review your finances to get a clear understanding of how much you spend on living expenses each month. It’s important that you’re honest with yourself about your spending, and realistic about the budget you can set for yourself. This is a crucial step in home buying, because getting approved for a $500,000 mortgage does not necessarily mean that you can afford the monthly payments that come with that.
3. Be realistic about what you really need.
Sure, a walk-in closet and ensuite bathroom would be nice – but it may not be possible for your first home purchase. Your first home is not your “forever home” so it most likely won’t have everything you dreamed of – but it’s a stepping-stone for getting there. When purchasing your first home it’s important that you are realistic about your “wants” and your “needs” so that you can make a wise decision.
4. Try to establish a 20% down payment.
In order to keep yourself in a safe, comfortable financial position it’s recommended that you aim for a 20% down payments on your first home purchase. Of course, with untraditional mortgages you can certainly do less but this is a great goal to set for yourself.
5. Be sure to factor in closing costs.
On average, closing costs can range from 2% – 3.5% of the total cost of your home purchase. Have you budgeted for this expense? Depending on your situation (and the home you choose to buy) you can expect to pay legal fees, home inspection fees, property transfer tax, land transfer tax, title insurance – and more!