Six things first-time buyers should know

Buying your first home is a major milestone, but many first-time home buyers are so anxious to sign the papers, that they make a lot of first-timer mistakes in the process. The following six tips are things that first-time home buyers should know before they even begin the process of looking for that first home.

Understand the financial aspects

A surprising number of first-time buyers don’t really understand how a mortgage works and consequently, have no idea how much home they can afford. So many anxious first-time buyers waste a lot of time initially trying to find the perfect home only to find they’re nowhere close to affording it. Instead, first-time buyers need to take a hard look at their own financial situation and understand what’s in their price range given their income, savings, and credit score.

See potential, not problems

Unless they’ve just won the lottery, most first-time home buyers don’t have the luxury of picking out a home that fulfills all their hopes and dreams. Getting that dream home often takes decades of trading up starting with a real fixer-upper. In almost every case, first-time home buyers will have to sacrifice on many of their wants. It can be easy at first, to dismiss a lot of good homes because of things the buyer doesn’t like but as time goes on, and the reality of their financial situation sinks in, first-time buyers eventually realize they’ll have to make some compromises. A better way is for first-time buyers to adjust their expectations from the start and realize that the homes in their price range are going to have some imperfections. Learn to differentiate between problems that are more easily fixed, and problems that are a money pit. For example, if a home has unsightly baseboard radiators, the homeowner can invest a little money into baseboard heater covers to make them more sleep and modern. If a home badly needs a new coat of paint, the new homeowner can paint it. Major problems like issues with the roof or the presence of harmful materials like asbestos or lead-based paint, on the other hand are more trouble than they’re worth which brings us to the next tip.

Hire a home inspector

It’s the home inspector’s job to help buyers differentiate between the easy-to-fix issues and the more problematic issues. A good home inspector will not only be able to spot problems that need immediate attention, but he/she will also be able to be give you a fairly accurate estimate of how much it will cost to make those repairs. This information is invaluable at helping you decide on a fair bid for a home. The information may also give you some bargaining power: you can require the homeowner to make certain repairs before offering the amount they’re asking for.

Hire a good real-estate agent

First-time buyers often forgo a real-estate agent because they don’t want to pay a percentage to him/her and want to get the most for their money. Ironically, it’s the first-time buyer who can most benefit from having a real-estate agent. It’s a good idea to pick an agent who is patient and ready to help guide you through the process and help you understand how it works and not just someone who will do all the work for you.

Space vs. convenience

The convenience of a home in the city means sacrificing space while the freedom of more space means sacrificing the convenience that comes with living closer to all the action. First-time buyers must accept going in that they can only have one or the other and need to carefully consider their priorities before settling on which kind of home to look for.

The down payment

The size of the down payment is one of the most important factors that will determine how much of a mortgage a home buyer can be approved for and what kind of rate they can get on that mortgage. First-time buyers often can’t afford a big down payment but it’s still important to save up at least a small down payment. Many first-time buyers make the mistake of trying to buy a home when they have practically no savings at all with which to make a down payment. This severely restricts the number of homes that will be in their budget.

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