Buying your first home is perhaps the most important decision you’ll ever make. Whether you’re a new couple or a small family of three, you’re looking for a spot you can spend the next few years of your life.
When you buy a home, you may be surprised at just how complicated the process actually becomes. There are a lot of nuances to the process, and without the right team in place, many first time homebuyers make huge missteps.
No matter how hard you try, there will be some stress and confusion. We want to help mediate that – SO, here’s a home buying 101 guide to get you started and help you avoid common mistakes.
Keep Your Emotions in Check
When buying a home, it’s easy to fall in love when you step into a house for the first time. Whether the house offers the perfect view or backyard for summer parties, you may be lovestruck at any moment during the first walkthrough.
The seller’s agent may pick up on your excitement and try to negotiate you out of every last cent they possibly can. Try not to let the seller’s agent read into your excitement about a particular home.
Keep in mind there’s going to be a home that comes at the right price. Be patient and keep yourself from falling in love with the first home you see. This will allow you to see your options and make a better, more informed decision.
Utilize a Buying Agent
When you buy or sell a home, you’ll find yourself working closely with a variety of different agents. Most of these agents, however, will be working for the seller.
Unless you make the effort to hire a buying agent, the seller’s agents will not work in your favor. The seller’s agents are required by law to work in the best interest of the seller. This means getting the most out of the home as possible.
You can hire a buyer’s agent to level the playing field and have an expert on your side. In some cases, a selling agent may not even accept an offer from an individual buyer.
They may feel they owe you a fiduciary duty and could be held accountable if you are displeased with your purchase. They may require you to have an agent to work on your side to operate as a liaison.
Whether you’re buying a home for the first time or the tenth time, you need an agent on your side. In addition to protecting your finances, they’ll help you keep your emotions out of your judgment.
Do Your Research Before Making an Offer
Before you think about buying a home, you need to evaluate your current financial situation. Consider your assets, debts, and needs. What can you really afford to pay every month for a mortgage without burdening yourself or sacrificing your other priorities? This will give you an idea about where to start.
Once you determine your financial needs AND have been pre-approved a lender, you can start looking at your housing options. Remember you’re buying more than just a building. You’re buying a location and lifestyle for your family.
Yes, you’re buying a piece of property in a particular neighborhood. But that neighborhood of your home will determine the schools your kids attend, availability of transportation, and crime levels.
Understanding these aspects of the home search will help narrow your criteria and give your agent an idea of where to look.
Don’t Break Your Bank
Consider the following situation:
Your agent presents you with two great options for your new home. One is adequate. It might need a bit of work before it becomes your dream home, but it’s within your budget.
The other is beautiful and representative of what you might think of as your dream home. There’s one big problem. It’s pretty far outside the limits of your budget.
It’s natural for each of us to dream big and want a little more than what might be reasonable. You might even convince yourself you can stretch your dollar to make the more expensive homework for you. Trust me—this happens a LOT.
But this can be a dangerous move if you decide to tempt yourself. Keep in mind, we as the lender extend you a mortgage offer based on your current financial situation and ability to repay the loan.
Even if you do qualify, going beyond the budget you established for yourself put you at risk of not being able to pay back the loan. It’s best to stay within your financial means and be able to prepare for future changes in your financial situation.
Know the Difference Between Price and Value
I know it’s cliche at this point, but when you buy a home, you’re likely making the biggest investment of your life. Don’t let this scare you, but keep it in mind when you shop around for homes and prices.
The price of a home is the dollar amount you pay. However, you need to consider the value of the home you buy. Paying a low price doesn’t necessarily mean you’re getting a good deal.
You need to think about future growth and changes in the market. When you buy a home, ask your buying agent for a market analysis.
Don’t make an offer based on the listing price of the home. Use your buying agent to help you determine the home’s value. Ask about recent sales in the area, changes in the market, and more.
With such information, you can make the best possible offer on the home.
Shop the Mortgage Before the Home
Before you start looking at homes, you need to think about your finances. No one wants to think about the hard stuff, because looking at homes is always the more fun aspect of the deal.
In case this wasn’t clear earlier before you even begin looking at houses, you need to understand your price range and get pre-approved. Having a pre-approval lender in-hand from a credible, locally established lender like The Lindley Team will give any offers you make more grit and better guarantee you’ll get the home you want.
This also helps you avoid disappointment. If you begin house hunting before you understand your price range, you could find yourself looking at homes you can’t afford. That’s no fun.
Get More Than One Rate Quote
In addition to getting pre-approved for a mortgage, you shouldn’t settle for the random internet lender you found at midnight on a Friday when you were drinking wine and decided to finally buy a house.
We know what you’re thinking: doesn’t each mortgage application count as a credit inquiry? Won’t that impact my credit score?
The truth is any mortgage applications made within a 45-day window will count as a single inquiry. This gives you the freedom to shop around and find a lender that is invested in your community, a lender that understands how laws and regulations work in your state.
Interest rates, closing costs, and discount points can be very misleading when quoted from an out-of-state lender. We highly recommend working with a lender that understands how this will affect you and your bottom line,
Keep in mind there are different types of home loans available to you. For example, you might have the option between a fixed or adjustable rate, a 30 year or 15-year loan term. Before you move forward, The Lindley Team will make sure you understand the terms of the loan before signing.
Be a Little Flexible
Buying a home is a huge decision, and you may have your eyes set on a particular size, style, or color. When you start shopping around, you’ll set yourself up for disappointment if you limit your options too heavily.
Give yourself a little wiggle room. Keep an open mind as you look at different homes.
Additionally, the home buying process can get complicated and messy. You may run into a problem at closing.
For example, the previous owners may still live in the house. This means you may need to make concessions concerning the closing or possession date. You may need to give the previous owners time to get their stuff together, clean, and move out.
Consider Renovation and Repair Costs
When you buy a new home, you’re buying any problems that come with the home. This is especially true if you plan to buy a house with previous owners.
Upon moving in, you may encounter plumbing issues, electrical problems, and more. Before moving in, make sure to get a home inspection to determine if there’s anything major in need of repair.
Typically, there is an inspection contingency period that is about 10 days from when the offer is made until the appraisal is ordered. If you find any major problems within this window, you could back out of the deal or have the repairs negotiated into the sale.
Consider whether or not you want to make renovations in the future. Calculate this into your budget and offer. For some, these renovations could be the ultimate goal of buying a home.
Make sure you get more than one estimate, as some estimates may be unrealistically low. Whatever the case, make sure you understand you’ll be investing more money into the home even after the purchase is complete.
Home Buying 101: The Takeaway
Buying a house can be an incredibly trying process for anyone. The whole process is riddled with financial and legal nuances. You should walk away from home buying 101 knowing it’s never a bad thing to admit you need a little help along the way.
In addition to hiring a buyer’s agent, you may wish to utilize an experienced mortgage broker. The Tammi Lindley Team is the #1 Rated Lender in Oregon, and we’re here to help you get into your dream home with the fairest loan possible.
Contact us today – Our advice helps you build wealth and prosperity faster by helping you make smarter mortgage decisions.