Ask the Expert: 5 Tips for First Time Home Buyers
We're really excited about today's "Ask the Expert" post, a must-read for first time home buyers. Bill Gassett has been one of the top five RE/MAX agents in Massachusetts for the past decade. And these tips are great for any buyer, anywhere!
5 Tips for Buying Your First Home
There are few purchases more exciting, and more unnerving than buying your first home. You probably have a lot of anticipation about the possibilities in front of you, and a bit of trepidation about the mortgage and buying process.
Fortunately, you are not alone in your hopes and fears. Every first-time homeowner goes through what you are going through, and most of them make it through the process successfully!
Over my twenty years as one of the top real estate agents in Medway MA, I have emphasized to my clients that the biggest obstacle in front of them is education on what it takes to buy a home.
The following tips will provide you with a good start on the process, and point you in the right direction for where you can dig deeper, and learn what you need to learn, to be a successful first-time homeowner.
1. Learn About Your Credit
Unless you are fortunate enough to have substantial savings or income from some outside source, chances are you are going to need to get a mortgage to buy your first home. The financing process is complex and challenging for most people when they first go into it, but if you find the right lender that is willing to help you understand your options, it does not have to be overwhelming.
However, you will discover that your mortgage options center around your credit. You need to learn what goes into your credit score, and how you can change that score, to get the best mortgage options – or any mortgage at all.
There are plenty of resources out there that can teach you about your credit. You want to know what your credit score is, but it is even more important that you know what affects that score. You may get pre-approved for a mortgage, but if you do something to knock your credit score, you could find that you are denied when you actually go to get the money for your first home.
If you discover that your credit is not as great as you need it to be, take heart. You can repair it and get yourself in a good position. It will just take time, patience and discipline.
By learning about your credit now, before you even start home shopping, you will be taking care of the biggest factors in your home buying process. Once you own your first home it is critical to understand how one missed mortgage payment can affect your credit score.
Keeping your credit in the best possible shape is always a smart consideration as it is a major factor in the interest rate you get on every major purchase that's financed.
2. Get Pre-approval For a Mortgage
It only makes sense to learn what you can spend before you start house hunting. By going to a mortgage lender, or talking to several different mortgage lenders, you can get an estimate on what amount you can get for a home loan. When you know what your mortgage options are, you can then shop for homes within your price range.
Keep in mind that different mortgage lenders offer different options, so it is worthwhile to shop around for a bit and see if you can find one that offers you the ideal mortgage for your needs. When it comes to mortgages, one size (or style!) definitely doesn't fit all. Learn more about what mortgage types (i.e. 15-year mortgage, VA loan, etc.) and what you need to know to qualify.
3. Find a Realtor That is a Good Fit
While you can certainly look through listings and shop around for a house on your own, as a first time home buyer you will quickly find that house hunting can become overwhelming and exhausting. There is so much to learn and so many mistakes you can make – costly mistakes – that hiring a Realtor will seem like the most obvious way to increase the efficiency of your buying process and to protect yourself.
But don't just go out and hire any Realtor. Like any job, there are some people that are great at real estate, and some that just want your money.
You should interview three or four Realtors, get references from recent clients, etc. Kyle Hiscock, a Real Estate agent from Rochester NY, does a great job explaining how to interview a buyers agent. You want to ask about not only how many homes the Realtor sells, but what price they sell for.
You want an agent that knows how to price a home right the first time. The better the agent you hire, the better your home buying options are going to be.
4. Know What You're Looking For
There are so many houses out there for sale. Just deciding you want a 3-bedroom is not enough to help you make sure you buy what you actually want. You need to take some time and consider all the things you want in a home, including location, size, amenities, etc. It can be helpful to think about what you want to use the home for – working on cars, doing art projects, raising children.
When you have a detailed description of what you want - both what is a necessity, and what you would really like to have – then you can talk to your Realtor and get an idea of your options. Chances are you won't be able to have it all, but you can often get close if you know what you are looking for.
5. Know What You're Not Looking For
What do I mean by this, exactly?
I mean you don't want to be caught unawares when it comes to matters of expensive structural damage. Do not skimp out on one of the most tedious and unpleasant, though entirely necessary, homebuying processes: the home inspection.
Know what sorts of questions you need to ask, and be sure to ask them. You don't want to be caught with your pants down here. Drainage issues, water and gas line issues, termite damage, faulty wiring. Be rigorous and exacting and get definitive answers to your questions from the folks you're talking to.
6. Be Financially Prepared
Owning a home is more costly than many potential first-time homeowners realize. There is no landlord to fix the broken water heater, for instance. You need to not only have enough money for the down payment and to pay the mortgage, but also to deal with possible emergencies.
Talk with your real estate agent about how much you should have set aside for emergencies based on the type of home you are going to purchase. Real Estate agents like to call this being fiscally responsible when buying a home.
(There are steps you can take during the home purchasing process to be sure that you're not hemorrhaging cash that you could be hanging onto. For instance, talk with your real estate agent and keep an eye on the local market to make sure that you're not buying during a seller's market.)
It is okay if you don't have a huge savings account to deal with every eventuality, but you do not want to be one of the first-time home buyers who has nothing set aside should something go wrong. Even small savings can make a major difference, and help you avoid going into further debt if you need to fix something in your new home.
Following some of these tips for a first-time homeowner will not only increase your chances of having a smooth purchase but a continued positive experience with home ownership!
Need some additional insights as a first-timer? Check out this essential piece of reading from New York real estate veteran Kyle Hiscock. Then take a look at these fourteen additional articles all first time home buyers should read. This resource is packed with helpful tips for a first-time buyer. Enjoy!
Bill Gassett is a nationally recognized Real Estate leader who has been helping people move in and out of the Metrowest Massachusetts area for the past twenty-eight plus years. He has been one of the top RE/MAX Realtors in New England for the past decade.