Tips for first-time home buyers.
Are you a first-time home buyer who is so worried whether you are making a good choice or not? Don't worry! Here, I have compiled great tips for you to consider in choosing your dream home!
When I was still single, I have closed my first house and lot at the age of 19, and a condo unit in 2016. Now, after 3 months of marriage, my husband and I are still renting. The good thing is, we have finally chosen our first home and are now in the process of acquiring it! (Yaassss! I'm so excited!!!) I am so excited to share my journey, mishaps, and learnings from my experiences in choosing and buying a real estate property for the first time.
Tips in buying a house:
1. Have a good credit score. Yes, good credit is the pillar of everything you want to buy through a loan. Depending on the kind of loan that you will get, you would need to have at least 580 credit score. The higher the better since your interest rate and loan amount would be based on this as well. I know that this is not something that happens overnight, so if you are dreaming to own a house in 2 years, aside from saving money, you also need to work on your credit score at the same time.
2. Save enough cash. Although property loans are available, a good sum of cash is still required in buying a house. Depending on the kind of loan that you will get, you would be required from 3.5%-20% downpayment. So for a quick look, a $200k property might demand a downpayment of $7,000 - $40,000. I recommend consulting a mortgage officer to see the actual downpayment percentage you are qualified for. Usually, new home-owners pay less. Planning to get a separate loan for the downpayment is not a good idea. Aside from worrying about a monthly note for this, most mortgage companies will reject your loan application if they found out that you are taking a loan to pay your downpayment. The only loan they will accept is your 401K loan, since it is considered your own money. In addition to downpayment, a "closing fee" is also required which can cost you from $7k-10k for a $200k house. Closing fee is the total amount of the required documents, tax, and insurance of the property. Other things such as home repairs and new furnitures are not required but are good things to be considered as well in your budget.
3. Do not be scared. A lot of first-time home buyers are scared. Scared of not knowing how, scared that they don't have enough money, scared of the responsibility, scared of change, and scared to sacrifice. The key is to avoid hesitation. Use your internet and research, call mortgage companies and ask questions, and talk to your friends and families who are home-owners. If you have a stable income, good amount of savings and always have some extra from your earnings, I assure you, you could make it!
4. Find a mortgage company and get pre-approved. Make a lot of research about mortgage companies and their reviews. Talk with friends and families and see if they can recommend any. Once you found a good one, schedule an appointment to get pre-approved. On this meeting is when they will run your credit score and check your income to find out if you qualify or not and how much you will be approved for. Take advantage of this meeting and ask all questions that you have in mind. I suggest that you list down your inquiries before meeting them so you won't forget it. Also, taking notes is a must so you would remember the things that you have discussed. This pre-approval is usually good for 3 months. This means that you have 3 months to find your dream home before they run your credit score again.
5. Find a location. This is very important because your happiness, comfort and monthly note will be based on this. You don't wanna be spending a lot of money in a location that you are not happy. Ask yourself if you want an urban or a country vibe. Do you want to be in the middle of the city where establishments like grocery stores, hospitals, and schools are all within 1-3 miles, yet you would have to deal with heavier traffic and higher property taxes? Or do you want to live in a more peaceful area with lower tax, but you have to always drive for at least 20 minutes to get your daily needs? Aside from the tax rate, consider the insurance rate and requirements in that area too! For flooded areas, you would be paying a lot on flood insurance while places near the beach will have a higher windstorm insurance. So you might be so overwhelmed that your monthly mortgage for the property alone is only $1000, but you ended up with a total amount of $1600 due to expensive tax and insurance. Try to list down a few towns/cities so you have more options.
6. Choose your atmosphere. Once you have listed your target areas, now is the time to narrow it down to the atmosphere. Do you wanna be inside a subdivision where the houses are only 20-40 feet away, or you want to have a bigger lawn and more trees? Are you okay with a neighborhood where the families who live there are from all walks of life, or within a community with households having the same income as yours? Imagine your self sitting on your front porch, what do you want to see? I personally want to have closer neighbors with clean lawns, so my husband and I agreed to get a property inside a subdivision.
7. Have a house design inspo. This will save you a lot of time from visiting properties that you don't really like. Do you only want a house that is built within 10 years for a more modern look, or are you fine with a 30-year old house for a rustic look? Remember, the front and frame of your house is what you will see first when parking on the driveway from a long day at work. Choose a house that will make you feel relaxed just by looking at it from the outside. So, while searching through listings, if the picture doesn't connect with you, it most likely won't make you happy once you see it. I know, sometimes things look better in reality than in pictures, so I am not asking you to only visit the houses that are 10/10 in pictures. Rate the houses you found on listing websites based on your own preferences, and only visit the ones with at least 8/10 score.
8. List down your must-haves. Create 2 different lists. First one to be the deal-breakers, and second one would be your preferences but not the necessary things that you want in your new home. How many bedrooms and bathrooms do you want? How big is your ideal backyard? Would you require a privacy fence? Is a walk-in closet a must or just a bonus? Just like item 7, this will also save you a lot of time as you could already prevent visiting properties that do not meet your criteria. Basic house features and facilities are already listed on property listing websites, and you could even filter your search based on the available facilities. My husband and I talked about this first, and we are so lucky to find our ideal home!
9. Find a real estate agent. Although you can find homes for sale and talk to the seller directly, I still highly recommend having a real estate agent specially for first-time home buyers like you. They will walk you through the process and they will be your "secretary" throughout your home acquisition. They are very helpful specially when it comes to giving expert opinion and negotiation. And most of all, they are free, because the sellers would be the one to pay them! Realtors usually have a profile or page where you can read reviews about them or their company. You can also ask friends and families for recommendations. Try calling some, and see who are quick to respond and how engaged they are with their responses. That itself will give you idea about the quality of their service.
10. If it doesn't talk to you, it's not the one. You might visit a property that ticks all your criteria and looks good on pictures, but to your surprise, you are just not in love when you stepped in it. Let me be the whisper in your heart: "Don't buy it"! It is like marrying someone, he has a good job, he is smart, funny, nice and handsome, but you are just not in love and can't see yourself married to that person. Same as your home. It is a place where you should find peace, relaxation and comfort. It is not a $500 property that you could easily replace. It would cost you hundreds of thousands and a fruit of your hardwork. So before making a decision, make sure you love it! Our new home is not perfect and could use some improvements, but what's important is that my husband and I are so in love with it despite its imperfections. If you didn't feel it, dont buy it!
Bonus! Haggle. Haggle. Haggle. But don't low ball as it might insult the seller. Ask the opinion of your agent or someone you know that has knowledge about real estate before you make an offer. Don't worry, the worst they can say is "No."
There you go! Good luck in finding your dream home! Let me remind you: Dreams do come true! Below are some photos of our new home (some of the current owners' stuff are still in it). Sorry for the low resolution.