2020 was a big year for first time homebuyers with nearly 2.4 million people taking the plunge on their first home. For many people, buying a home is a major step on the road to adulthood or the road to starting a family. It’s not a peril-free venture, however.
Are you thinking about joining their ranks and becoming a first time buyer this year? If you do plan to buy a house, there are some things you should know and do along the way. Keep reading for five tips that will help you navigate the process as you buy a home.
1. Set a Budget
One major mistake that first time home buyers make is that they start looking for a home before they set their budget. Few things will prove more frustrating than finding out you simply cannot afford that dream home you picked out.
When you figure out what you can reasonably pay, it means you’ll search for homes you have a real shot of buying.
2. Get Preapproved
Once you have a budget in mind, go out and do some comparison shopping with mortgage lenders. Keep an eye on their interest rates and their fee schedules. Once you find a few lenders you like, get preapproved for a loan.
Again, this ensures that you know what you can spend and will focus on houses you afford.
3. Hidden Costs
First time homeowners are often caught off guard by the hidden costs of homeownership. For example, you must plan and budget around property taxes. Depending on the house’s location, you may owe homeowners association dues and fees.
You’ll need homeowners insurance for the house. If you got your utilities with your old apartment, you’re on the hook for those bills now. The good news is that once you know those hidden costs, you’ll find yourself better prepared when you buy your next home.
4. First Time Homebuyers Programs
Many states and even some cities run programs specifically for first time homebuyers. These programs can help reduce the upfront costs or help with payments. You should contact the program office or visit their website for specific details and options.
5. Think of It as an Investment
When you buy a home, especially a first home, you should think of it as an investment. Why? Average residency time in a home runs about 8 years.
It’s a step that helps you build equity toward that dream home you’ll buy down the road.
Surviving Your First Home Purchase
First time homebuyers often go into the process without a clear picture of what lies ahead. Surviving that first home purchase means you should arm yourself with information.
Learn about interest rates, escrow, and closing costs. Shop around for mortgages. Find out if you qualify for a first time home buyer program that will keep costs down.
Also, remember that your first house is almost never your last house. Treat it like the investment it is.
Looking for more real estate insight? Check out the posts in our Life Hacks section.