Purchasing a home can be the largest investment so far for some individuals. There are various reasons why people would wish to buy homes. Some will buy homes to hasten the relief of rents while others will do so to enjoy the prestige of home ownership. Good number of people will buy a home due to the fact that they are tired of living in their dad`s and mom`s basement. But jumping into the world of home ownership seeks a well and adequate preparations of whoever wants to buy a home.
Buying a home for the first time may seem so challenging to some people that they can just go with the first house that falls in their price range or sometimes they even continue to rent. Therefore to overcome the challenges of first home buying, there are several factors you must take into consideration. There are several first time home buyers programs in place to cater for everybody`s plight. But again different country/states have got their own variant programs. You may need to examine what you will be expecting from the buying process and how life will continue after buying your new home.
- What to consider
- Buying process
- Mistakes made by first home buyers
What to consider
The first thing you should give the first priority is the long-term goals in relation to owning that home you want to purchase. As we have said before, the reasons and goals may vary from one individual to other. Some people will view homeownership as a sign of being independent and to enjoy being their own landlord. So the big deal therefore is to find out what will work in favor of your goals. So here are some factor which you may take into consideration before you buy a home:
1. What type of home will best satisfy your needs or goals?
When buying a home, you will have various options for example you can opt for a townhouse, traditional single family home or multi-family building having two or four units. But remember that each option has its own advantages and disadvantages depending on your goals and reasons for buying a house. If you choose your proper type of home and work out everything smart, then the benefits of your home might be much more than you bargained.
2. Specific features for your ideal home
Due to the fact that purchasing a home is one of the biggest purchase in many individuals` lives, you deserve all the rights to a have a home that will fit both your needs and desires. This may include basic wants like good neighbors, the size of the compound, ideal climatic conditions for you among others. Your desires may narrower down to even minor details like the bathroom and latrines layout, kitchen with good appliances etc.
3. What amount of mortgage you qualify for?
Before you are able to jump into the buying process, it is very important for you inquire on how much the lender will be willing to give you to aid your first home purchasing. “Buyers should have an idea of how lenders will view their income, and that requires becoming familiar with the basics of mortgage lending.” [bankrate.com]. Sometimes you may think to afford the higher priced homes than the amount your lender may be willing to give to you. Remember before you receive any amount from you lender, the amount you will receive will basically depend on other debts you have, your monthly salary and how long you have stayed at your current job. So, sometimes these factors may not favor you, therefore you need to sort out the amount your lender is able to give to you for proper budgeting.
4. How much the price of home you can afford?
Before you roll in for home buying process, it is important you clearly define how much is the down payment, monthly payments, property taxes, how much it will cost you to maintain and improve the house and finally how much the closing cost will be.
5. How you will find a home and be guided through the buying process?
It will be a good idea to find somebody (professionals/experts) to help you find a home and guide you through the whole home buying process. The experts will help you to locate homes that will meet your needs. They will also assist you find homes that are in your price range. After identifying a home of your choice, then you can seek the service of the same experts to help you negotiate the purchasing process. This will include getting loan, making offer and completing the paperwork for you.
During these moments, there will be various offers and counter-offers everywhere. So the process will seek for your preparation and commitment to get through the whole game with your sanity. So check below to see how you should progress:
1. Find your desired home
You should explore all the offers in the market and choose the home that best fit your desire and needs. You should also include your real estate agent to take you through home search list. You should also put some feelers alongside your friends, family members and business contacts to help in the same.
2. Consider finance options and security
As a first time home buyer, there are several home buying options available out there for you. Shop around first to make sure that you choose the loan bearing in mind that, your mortgage interest rate will have a major impact on the total price you will pay for your home. So with the assistance your real estate agent, make all agreements on paper. Afterwards you can then proceed to making any necessary payments bearing in mind the issue of closing cost. Remember that following the right and lawful procedures will help you to avoid the intimidation that may befall the buyer in the whole game.
Mistakes made by first home buyers
Before you are able to climb the ladder of purchasing your home for the first time, you need to be very careful with your financial needs alongside the short and long term needs. Any slight mistake can leads to an undesirable result for you. So here are some of the most popular mistakes made by the first time home buyers:
1. Improper financial planning
Poor financial planning is one of the most common challenges facing first home buyers. As a first home buyer, you should bear in mind that sometimes overestimation of the home cost is at least bearable than underestimating the same. Again there are some other additional cost that also must be included in your budget, like for instance there is stamp duty, loan appraisal, insurance and legal fees. The percent of these additional charges will vary depending the house location or home buying program in your state. So you will find many of first home buyers having improper financial planning making it sometimes difficult to climb the ladder of home buying.
There are also some cases where you find first time home buyers choosing risky loans. So before making any step to receive a loan, you should talk to a mortgage loans or loan officer to gather more information on various loan products. First time home buyer should understand that there is always a loan for every person and situation. So when somebody does not educate himself or herself on various loan products then he/she might end up selecting a very costly loan that repaying may be difficult. Sometimes one may even opt to sell the bought home to repay the loan. So you should be very careful before you receive any loan to purchase your home.
2. Not observing the value of home resale
Sometimes, due to the fact that you are a first home buyer and will not live in that home until your retirement or for the rest of your life, there may be need to resale the home. For this case, before stepping foot in your first bought home, you need to consider the resale cost of the house. A home is a long-term investment so taking into account the potential investment return is a good idea.
3. Skipping home inspection
Paying a visit to a home is very essential factor that must not miss in your plan. It will help you to get conversant with the maintenance that the house may require. For this, you may need to seek the service of home inspectors to do the inspection on your behalf. Remember the inspection should cover the structural features of the identified house and this will include the plumbing, pest control and infestation, electrical system of the house and other general home features.
4. Failure to have an agreement on a paper
It is very important that every agreement between the seller and the buyer be done on a paper. It is not a good idea for the agreement to be done verbally because legal agreements are not legally binding. Sometimes after making all the required payments the seller might change his/her mind and due to the fact that there will be no virtual evident, the buyer`s right may be limited. So it is therefore advisable to keep every agreement on a paper. Many first time home buyers may fall a victim of such situations because they may be still naïve to the home buying processes.
6. Failure to shop around
As a first time home buyer, you should talk to different lenders. This is because interest and closing costs will vary from one bank to another. So to be able to have options to choose the best rates, you should at least obtain four different bank quotes. You should then compare each quote to determine your best option. The factors you will need to consider include, mortgage rate, closing costs, down payments, private mortgage insurance, and a potential prepayment penalty.
7. Not working or cooperating with realtor
Sometimes it may seem a burden having a realtor to buy a house, but you should be able to understand the benefits of having a buyer`s agent. A buyer`s agent will guide you in the right direction, he/she will help you negotiate your bid, counter an office and even organizing the closing process. The seller will have his/her agents, it will then make sense for you to have your agent because after all, in most cases, it is the seller who will be paying both agents.
8. Home searching mistakes
Normally, first home buyers do not only experience financial challenges but they also experience home searching mistakes. As a first time home buyer, you should properly conduct your property search without any mistake. So look at the common home searching mistakes made by first time home buyers:
Limited property search
Some buyers will always keep their mind set on a certain neighborhood, city, province or whatever their desire may be. They may be having their specific reasons, but it is not a good idea as such because let say for instance, your desired home should be near a river or a lake, then why limit your search to particular province yet there might be other homes next to lakes/rivers in other provinces. But we should not judge your desire, it you to decide your favorite home!
Not visiting the property several times
Sometimes when the seller want their homes to be sold very quickly, they may rush the buying process or try to force the buyer to make improper decision that may be dreadful after property purchase. So as a first time home buyer you must bear in mind that after signing the closing paper, there will no more turning back. So before stepping into the buying process, you should visit the property several times to determine whether the home is fit for your family, are there rowdy neighbors? Is there loud music? Are there good transport means? You should therefore pay the property at least three visit before you climb the ladder of property purchase.
Home buying is a very complicated process. It is somehow stressful and demoralizing. Whether a first time home buyer or veteran buyer, there are many problems that might and will arise. These might include low appraisal, higher closing rate than the buyer could have expected, hidden damage during house inspection. Due to the fact that this is a stressful and nerve-racking event, the more you learn and educate yourself a bout the process the more you will drive away from making serious mistake that may lead to dreadful results.
Sources of Reference
- 5 tips for first-time homebuyers: http://www.bankrate.com/finance/mortgages/5-tips-for-first-time-home-buyers-1.aspx
- Top 10 Tips for Buying Your First Home: http://home.howstuffworks.com/real-estate/first-time-home-buying/10-tips-for-buying-your-first-home.htm
- First Home: http://www.realestate.com.au/advice/buying/first-home/
- First-time home buyer guide: https://www.moneyadviceservice.org.uk/en/articles/first-time-buyer-money-tips
- Common Mistakes Made by First-Time Home Buyers: http://www.moneycrashers.com/mistakes-first-time-home-buyers/
- The top 5 mistakes first home buyers make: http://www.macquarie.com/au/personal/home-loans/expertise/first-home-buyer-mistakes
- Top Tips For First-Time Home Buyers: http://www.investopedia.com/articles/mortgages-real-estate/08/first-time-homebuyer-guide.asp