First Time Home Buyers
Once you have decided that you want to be a homeowner, you should consider several factors before shopping for a new home. Many first time home buyers may have dozens, if not hundreds, of questions and seek advice from family members, friends, and relatives who are currently homeowners. There are hundreds of first time home buyers articles on the internet as well as home buying guides for first time home buyers. Homeownership come with responsibility and homeownership is a long term commitment. Most home buyers who purchase a home stay on their new home purchase for at least five or more years. If you are planning on moving constantly, maybe homeownership may not be for you. Re-sale of your home should be considered. If you were to purchase a home today and sell it in a year, the chances are that you may lose money on your investment unless the property has appreciated substantially. First and foremost, you need to list your home with a real estate agent. The realtor’s commission will be 6% of the sales price or more. Then you have moving expenses and closing costs.
Consider Long Term When Buying A Home
If you are a young couple who recently got married and are planning on buying your new home, consider long term. Will you be having kids in the near future? Are you planning on having pets? Large dogs? Do you think a large fenced yard will be necessary? Will you have in-laws or family members visit you for extended visits?
These are considerations you should have in mind before shopping for a home. Maybe a four bedroom home will make more sense than a 2 or 3 bedroom home. I have seen many first time home buyers who purchased a two bedroom home and needed to sell their home to purchase a four bedroom home because they had to accommodate their elderly payments. By planning your home purchase, you will avoid moving again and save thousands of dollars.
Re-Sale Of Property In Future
Always think about the future re-sale of your property. There are many homes that are unique where it will accommodate your needs, however, it will not accommodate the needs of other potential home buyers. For example, you might be a car enthusiast and the home you are interested in buying may have a six car garage where the home itself is only a 3 bedroom 2,000 square feet home. The six car garage may be a major benefit for you but how many homeowners need a six car garage. You also do not want to have a white elephant where your house is the biggest home in the area. Having a 5,000 square feet home where most of your neighbors have homes that are 3,000 square feet is normally not a wise investment. You do not want to have the largest home in the block.
Make Check List On Items Important To You
First time home buyers and seasoned home buyers should make a check list on item that is important. For example, attached garage versus detached garage, master bathroom in master bedroom, full basement whether finished or unfinished, eating area, number of bedrooms and bathrooms, and other amenities that you would like. Chances are that not every home will have the amenities that will suit you but you can take the check list with you on every home you visit and weigh the pros and cons and the home with the most wants on the check list may be the home for you.
Analyze Total Housing And Associated Expenses
Your PITI, principal, interest, taxes, and insurance, is not the only housing expenses you should consider. There are other expenses associated with each particular home depending on the location. Property taxes is the biggest factor. One county’s property taxes on a home may be $3,000 while the adjoining county property taxes on a similar and like property may be $12,000. Same with homeowners insurance. Homeowners insurance can vary from county to county or city to city. Utilities is another cost that have variable rates depending on location. Another major expense is commuting expenses. How far is your particular home from work? Do you have to pay tolls? Tolls can cost a lot and many times a commuter pays multiple tolls to get to work. All these are considerations that first time home buyers need to consider.
Some homes are part of a homeowners association. Homeowners associations charge a fee and is somewhat like property tax. You need to pay a homeowners association fee if your home is part of a homeowners association and if you do not abide by the homeowners association by-laws, they can take legal proceedings against you where they can even foreclose on your property. Find out whether or not they will allow for you to rent your property in the event if you want to make your property a rental in the future. If you intend on doing a major remodel on your home in the future, you need to have the homeowners associations approval so check with the homeowner association and get the list of their rules.
Thoroughly Review Real Estate Purchase Contract
Always ask for a sellers concession from the home seller where you do not have to pay closing costs. Your realtor will help you with that. Thoroughly review the real estate purchase contract and make sure that you are protected with contingencies. You should have a financing contingency, home inspection contingency, and appraisal contingency among many others. Contingencies are extremely important because it is the contingency that will give you the right to cancel the real estate purchase contract and get your earnest money back.
Study Demographics Of Neighborhood
First time home buyers should thoroughly study the demographics of the neighborhood they are buying their home. How far is public transportation? How far is shopping centers? How far is the toll way from your home? What type of people live in your neighborhood? Single people? Families with kids? Seniors? Students? What are the percentage of homeowners in your neighborhood? Are there apartment complexes nearby where there is public housing?
Not all mortgage lenders will require reserves. However, every homeowner should have reserves in the even if something goes wrong. As a homeowner, you will no longer have the luxury of calling your landlord when the furnace or air conditioning unit breaks down or if your appliances don’t work. Some of these repairs can cost several thousand of dollars.