Tips for first-time homebuyers. Our experience and thoughts at the beginning of the home buying process. Budget advice and things to be prepared for!
Everyone’s first home buying experience is very different but there are plenty of traditional standards.
Some expenses were expected and some I wish I was a little more prepared for. We have not yet closed on our property, but these are the things I do know…
- YES PLEASE BE OUT OF DEBT
- Have hefty savings, you will need more than you expect
- Make sure you have an emergency fund on top of a down payment
- Be prepared for your market
- You will need to be in contact with a lot of people
- Don’t worry the house will find you
Becoming debt free is so important.
I have realized now more than ever how much debt poorly affected my life.
It is so important that before you buy a home you become debt-free. Seeing my mortgage payment now I can’t imagine still having other loans.
Our mortgage payment is around $1,400.00. If we still had our debts we would have another $1,000.00 worth of payments going out.
With no debt, if we pay $2,400 per month (the 1,000 + the 1,400) towards our mortgage we would have our house paid off in 10 years.
If that isn’t motivation to be debt-free I’m not sure what is.
Not to mention how much longer it would take for us to buy things like furniture, make upgrades, or fix things that went wrong.
Being out of debt has allowed us to think about our home and only our home which is so freeing.
You should save as much as possible.
I have read time and time again to save up for a hefty down payment. 10-20% is recommended.
My husband and I decided to save $40,000.00.
We based that goal on the purchase price we were looking at.
This is going to be very dependent on your area but you can never have too much money.
My husband and I started looking when we had $30,000.00 for a purchase price of up to $250,00.00. Recommended by our relator.
Our actual purchase price $210,000.00. Allowing us to put 10% down.
Realize even tens of thousands of dollars will not get you super far.
We are estimated to bring $34,000.00 to closing.
This money will give us 10% down and pay for taxes and closing costs.
Closing costs and taxes are going to be a large portion of your down payment total. Especially if you live in a more expensive state.
That is why closing costs are often time negotiated. It is expensive.
When searching for an area to live in taxes were a big deal. We wanted a good location with good schools but lower taxes.
One town over the school and town tax is about $12,000 per year as opposed to our town which is around $6,000.
Having a hefty emergency fund for us has created such a piece of mind.
Even if you are buying a newly remodeled home if you empty your bank account you will be terrified.
Banks also don’t like to see you empty your savings before giving you a loan.
My husband and I saved for our EF separately before saving for a down payment.
Not having anything in savings is so risky.
If anything were to go wrong we would have no saved income to fix the problem.
Or if either of us were unable to work we wouldn’t be able to pay our bills.
This has happened to us in the past and you can read more about that story here. Please, please please have some savings!
Our market was something we weren’t prepared for.
This is dependent on year and location but I’m sure someone will find their situation similar to ours.
Right now, in northeastern New York, the housing market is crazy!
It is a seller’s market and on top of that, we were looking in one of the most popular seasons to move, spring.
We began our search in mid-April and we were very relaxed and in no rush. After finding a realtor and looking more deeply into the market we quickly realized you couldn’t be slow.
Houses were spending 1-2 days for sale before going under contract.
We were hearing of bidding wars between buyers and it was driving up sale prices.
We looked at probably 10 homes and experienced about 7 canceled showings.
Houses were coming off the market faster than we could see them.
This does not mean that you should ever settle for something that you don’t want.
Just be prepared to either look longer or pay more. The fast-moving houses did become frustrating.
If you are interested in buying a home and your area is similar to ours make sure you see them immediately or be prepared for them to go under contract.
The number of professionals needed to buy a home is a lot.
There are a lot of professionals that sit in your corner during the home buying process.
The first person is your realtor.
We worked with someone we knew from our employer but make sure you do your research.
Having someone recommend someone they like or have used is a great option.
You then have to find yourself a mortgage broker.
You will need to put in for mortgage approval and then later find a lender you want to work with.
This might mean sitting down with multiple different banks to get the best options. Or making a lot of phone calls.
Some banks offer loans that are out of state so make sure you are aware of that when deciding.
You will also deal with the bank’s loan processor once you are approved. Even at this point, we have signed a load of documents already!
Once your contracts are written up a real estate lawyer must represent you.
Your realtor often can recommend one or again ask your house-owning friends and family.
Remember this is a person that also has to get paid.
On the purchasing side of things you also will need to find an inspector and get the house appraised.
Our inspector was recommended to us by our agent. They are fairly easy to find. This also racked up a bill of $500.00.
Some banks may cover this fee most do not. Our loan processor will take care of the appraisal but we will be paying for that upfront.
A piece of advice…
In our experience thus far there has been a lot of miscommunication.
When so many parties are involved and all of them need to be contacted about every little detail it is easy to lose track of who knows what.
Make sure you and all of those representing the sellers are CCed on all emails and communication so things don’t get lost in translation.
Last but not least everyone is going to tell you their experience with finding their first home.
One person may even tell you they cried.
When Mike and I left our house we really truly liked it. It had everything we were looking for. Literally almost everything.
My husband and I went out for coffee and talked about what we would do if we bought it.
Paint the walls, re-do the backsplash, the couch will go here. Yet when we were in the house I never had this oh my gosh feeling of this is my house.
I felt excited yet confused.
I wasn’t sure that we had seen enough.
Mike and I found it hard to believe that we found our house in only 3 weeks.
I had always assumed that it would take months before we found that perfect house. It made me a little uneasy that it didn’t turn out that way.
We saw the house on a Thursday and put an offer in on Sunday night.
There was another offer that was not accepted but we did think about it for a few days before we made a decision.
The best part was we purchased our house on our one year debt free anniversary.
If that wasn’t a sign!
After our offer got accepted I no longer wanted to see any more houses.
I truly believe we are meant to have this home. This is the biggest and most expensive purchase we will ever make and we are so excited.
Our financial decisions up to this point have to lead us here and we could not be more ready. This house will forever be a blessing.
When you purchased your first home what are some tips and things you experienced?
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