Buying a home is one of the largest investments you will make in your life. With the numerous choices you must decide on between finding the perfect home, choosing a moving company, and choosing the right financing, things can get quite overwhelming. Looking back, many first time homebuyers wish they had done things a little differently. Here are the most common things they wish were slightly different.
Save More Money
It is never too early to start saving money for your new home. Even before you think you want to buy a home, it helps to put money away. This way you have a better chance at saving enough money to put a 20 percent down payment on the home. This helps you in the end because if you put less than 20 percent down, you may have to pay private mortgage insurance. This premium could add several hundred dollars to your monthly payment depending on the amount you borrow. This is also a fee you never see again – the money goes to an insurance company and is not something you recoup when you sell the home.
In addition to putting money down on the home, though, are the numerous closing costs you must pay. Many first time homebuyers do not realize how expensive it is to close on a loan. The more money you save ahead of time, the easier it will be to afford the closing costs. You can count on your closing costs totaling between 5 and 6% of the loan amount. The exact amount depends on the number of points you pay, the amount of closing costs the lender charges, and the amount the third parties charge, such as the appraiser and title company.
Research the Area
You can fall in love with a house very easily, but you might not love the area as much. It is impossible to tell what a neighborhood is like after seeing a house just once. You need to talk to the neighbors and visit the area several different times. At the very least, you should drive through during the day and at night. You never know how an area can change during this time. What if there are people on the block who love to host loud parties or kids who hang out in the cul de sac where you might live? You should know these things before purchasing a home.
Taking the time to talk to the neighbors will also inform you of things that occur in the area. Maybe there was a period with a rash of break-ins or other community issues. Talking to people who lived in the area for a while can give you the information you need to decide if the area, not just the home, is right for you.
Know What You Want as First Time Homebuyers
When you shop for a home, you can get overwhelmed quickly. As you see houses you love, you might forget about the important things you need. Think of things such as:
- The number of bedrooms you need
- The type of kitchen you prefer
- The amount of entertaining you think you will do
- The type of land you want
Once you know what you want, don’t sacrifice. If it means giving up a layout you think you love, do it. You will be grateful down the road when you have the type of home you desire. For example, if you know you will have children, buying a 2-bedroom home now because you fell in love with it could be something you really regret in the future when you run out of room. First time homebuyers that made rash decisions really regretted sacrificing what they wanted.
Don’t Skip the Home Inspection
As a first time homebuyer, it is easy to skimp on certain things to save money. One area you should never overlook, however, is the home inspection. This is the time when a neutral third party comes in and looks for things that are wrong with the home. When you fall in love with a home, you can easily overlook the issues it may have. If the issues are large, such as foundation, roof, or plumbing issues, you might change your mind about what you want to purchase. At the very least, the home inspector can give you something to negotiate with the seller. If you still really want the home, you can ask the seller to fix the issues before you close on the home.
First time homebuyers have many advantages, including many loan programs which are flexible enough for them. When it is your turn to purchase a home, make sure you take your time. Although the time is exciting, there are many things you need to consider in order to ensure a successful outcome. There is no reason to rush through the process, there are many homes available out there and many loan programs to help you secure financing.
The more prepared you are for the purchase of your first home the better off you will be in the end. Don’t make the mistake of having regrets like many other first time homebuyers. Know what you are getting yourself into and explore all of your financing options. Shop with different lenders and get various opinions on the programs you are eligible to receive in order to make the most of this large investment in your life.