Whether purchasing a car for the first time, a home for the first time, or anything for that matter for the first time, it can come with much confusion, a high level of uncertainty, and even some stress. The home buying process is often seen by many as a “daunting” process. This doesn’t have to be the case, with proper preparation and guidance from a Siouxland real estate expert buying your first home is easy.
Each and every person who purchases a home normally will have different experiences, obstacles to overcome, and ultimately have their own opinion on the home buying process, so beware of many opinions when talking with family, friends, and co-workers. Even though the majority of home buyers are different, the overall home buying process is usually the same. There is a general outline that should be followed when buying a home for the first time, with slight variations needed for every unique buyer.
Below we will look at some key tips and advice to make buying your new home stress free and seamless
What’s Your Budget
No matter what you’re buying it’s important to know what you can afford, and this is especially true when buying a home. Many first time buyers don’t realize or understand that it’s very important to know how much they can afford before looking at homes! It’s not unusual to have first time home buyers contact real estate agents and get upset when they are educated on the importance of finding out how much home they can afford before venturing into the marketplace! It’s important that a first time home buyer understands what the costs of buying a home are but also why they are involved.
Another important thing for first time home buyers to understand is the difference between pre-approval and pre-qualification.
A pre-qualification is a quick and general overview of a first time buyers financial situation. The information used for a pre-qualification is usually given to the lender by the potential mortgagee, which can often be inaccurate. In addition to the general overview of the first time buyers financials, the lender usually will pull a credit report to make sure the credit scores are within the required guidelines of the different loan programs.
A pre-approval is a detailed look into a first time buyers financials. It includes a lender pulling a fact data credit report, collecting the first time buyers pay stubs, W-2’s, verifying their employment, and any other information needed to approve the buyer. This process may sound much more difficult, but depending on the lender that a first time buyer chooses, it doesn’t have to be! Having a pre-approval instead of a pre-qualfication is not only attractive to a seller, but also can be the difference in a first time buyer winning in a multiple offer situation!
Think about hidden costs of home ownership
Many first time home buyers make the mistake of not considering the costs of owning a home. It’s common that a first time buyer purchases a home that is the absolute maximum they can afford according to a lender. This can lead to problems once the buyer realizes the other expenses involved in owning a home. First time home buyers often forget about additional expenses of utilities, furniture, appliances, insurance, and groceries, to mention only a few.
A first time buyer who doesn’t consider these additional expenses often will have to change their lifestyles, which can be difficult for some. Instead of living with mom and dad who had cable TV and high-speed internet, they may now have to live without these luxuries. Bottom line, a first time home buyer must consider all the expenses and possible changes to their current lifestyle that may occur once owning a home!
Have Realistic Expectations
Buying your first home is an exciting time, but it’s also important to have realistic expectations. By setting realistic expectations, the chance to be disappointed or let down is minimized. So, what type of expectations should be set before purchasing a home for the first time?
Once a buyer knows how much they can afford, it’s important to figure out what their money will get them. How big of a home can be afforded? What style of home is desired? What are acceptable locations of the home? It’s important that first time buyers have a strong feeling on items like these but also a good idea on which items they are willing to be flexible with. It is a great idea to prioritize these items in order of importance.
Buying a home with no expectations or goals in mind is no different than going to a grocery store with no list or budget. By going to a grocery store with no idea what will be purchased often will end up in lots of wasted time walking around aimlessly and ultimately not getting the results that would be expected. By having that strong grasp on the style of home, the size of a home, and other characteristics that are desired in a home will save a first time buyer lots of time and also ensure they are purchasing their first home while staying within the range of what they are able to realistically afford. It makes no sense for a buyer who is pre-approved for a loan amount of $150,000 to look at local luxury homes. A great real estate agent will help a buyer set realistic expectations.
Get Educated on the Local Real Estate Market
When purchasing a home for the first time, it’s important a buyer understands the local real estate market. There are many ways this can be accomplished. The internet has completely changed the way the real estate industry works in 2016! There is so much information available on the internet that can certainly help a buyer understand the local real estate market. The internet is great for providing a wealth of information, however, it’s also important a buyer understands that not everything that is on the internet is true. There are many third-party real estate websites on the internet that provide some very inaccurate information. A perfect example of inaccurate real estate information are the “Zestimates” that Zillow provides to consumers. These third party websites are not held accountable for inaccurate information and thus many of their listings have ridiculous prices and are out of date.
The best place for a first time home buyer to get educated on the local real estate market is by a local real estate professional. If someone was looking to have a dental procedure done, they wouldn’t go on the internet to look how to do the procedure or call their chiropractor. They would call a local dentist for their assistance. A person in New York City who is in need of a dental procedure would have no use for a dentist in Los Angeles. The same can be said for a first time home buyer. A first time home buyer in Sioux City, IA should not be looking to a national website for information on the Sioux City, Iowa real estate market. It is important for a first time home buyer sit down with an experienced and knowledgeable local real estate agent to ensure they have a strong understanding of the local market!
Find Incentives and grants for first time home buyers
First time home buyers are often able to take advantage of first time home buyer grants or incentives. It’s important that a first time buyer understands that every lender is different. From the interest rate they are able to offer, the type of loan products they offer, to the incentives or grants they are able to offer.
A lender who may not offer a grant to first time home buyers, may never mention it. When selecting a lender, it’s a good idea for a first time home buyer to research all of their options. It sometimes is a good idea to reach out to a local real estate professional before locking into a local mortgage lender. A great real estate professional should be able to understand a first time buyers situation and be able to suggest reputable companies who may offer the best type of product and/or grant for that buyer.
Choosing a Real Estate Agent
Buying a home is a very large event in life. It’s not something that should be done without the help of a trained real estate professional. There are many things that a real estate agent is responsible to ensure are getting completed accurately and timely throughout the transaction. Ensuring a buyer has secured a pre-approval from a reputable lender, ensuring contract dates are being followed, and negotiating on the buyers behalf to get them the best price for a home are just a few items that a buyers real estate agent is responsible for! Without this guidance, it’s very easy for a first time buyer to make a mistake that can cost thousands of dollars.
Conclusion
The above information is extremely important for home buyers to think about. I you have any questions feel free call me at 602-215-1682 or email me through the contact form available here