Are you thinking about buying your first home this year? It has been said repeatedly that this is one of the biggest financial decisions you will ever make. It’s both an exciting and nerve-racking time for perspective homeowners. Setting realistic expectations is a must; rarely do first time home buyers purchase their dream home. That may happen on the second or third purchase.
The first step is to save! According the National Association of Realtors, 32% of all buyers cut spending on luxury or non-essential items. Twenty-six percent cut spending on entertainment, 20% cut spending on clothes and 13% canceled vacation plans. The NAR also reported that first-time buyers are most likely to make sacrifices. Combined savings and income will dictate how much home you can realistically afford.
Be willing to do the necessary research, and define your needs to help make the home buying process easier. Use tools on the web to preview homes, calculate monthly payments, find a Realtor in your area and research neighborhoods. Maybe spend the weekend attending open houses to get a better feel for what’s available on the market. Evaluate your “must have’s” and your “nice to have’s.” Are you buying a single family home or condo? What neighborhoods are high on your list? How many bedrooms do you want; what other features must it have? Schools are very important if you have children, or are planning to start a family.
When you decide that the timing is right to enter the real estate market, finding a good Realtor is an important part of your overall success. A good agent will help you match those features that you desire with the available inventory. As a new homebuyer, you may qualify for one of several down-payment and purchase assistance programs, so talk to your Realtor about those options.
Next, talk to a lender to get pre-approved! This is critical in a competitive market, where many sellers see multiple offers in a short period of time. Traditionally first time home buyers are asked to put down 20%, this is not always feasible in major metropolitan areas where average homes may start at $400,000 to $500,000. Thankfully many mortgage lenders offer a variety of products that allow homebuyers to qualify with smaller down payments. Important note: Between pre-approval and closing, don’t make any large purchases or apply for new credit, this will affect your credit score which may in turn jeopardize your loan!
In order to find just the right home for you, your Realtor may show you anywhere from 10 to 30 homes over the course of several weeks, and you could end up making several offers. Don’t get discouraged, because you are one step closer to realizing your dream. Remember, your Realtor is your best friend in this process because he or she will guide your offer strategy, help you get through the inspections, walk through and ultimately closing.
Buying a home can be overwhelming at times, but keep in mind your long-range goal which is to be a homeowner. When you understand the process, you will be rewarded with the security that comes from having an appreciating asset that you can also call home!
This was also posted on The Credit Repair blog
If you’re interested in buying or selling your home in Washington, DC, Maryland or Virginia, please visit our agents page to find a knowledgeable Realtor who can help you get a great result!