Looking to become a homeowner? Well, congratulations on your decision to join the fray! The real estate market can be fickle at times but rewarding at best. Still, you need to give yourself every advantage.
(1) First, you want to assemble a winning team.
Work with experienced and resourceful professionals whose primary job responsibilities include working with first-time home-buyers. Even if you are not a first-time owner, you will benefit from the lengths your realtor will go to fully prepare you for this sizeable investment. A good agent or broker will listen to you and your questions as the process unfolds; but an excellent one will understand your position (you are new to this, right?), anticipate your questions, present you with all of your options and remain in open communication with you before, during and after the sale.
By the way, if you have not already selected a lender, be sure to do ample research. Consult reviews posted on Google and uncover complaints to the Better Business Bureau to get an idea of the service potential customers can expect. Some lenders are known for shady practices including but not limited to: ignoring emails and phone calls for support, luring buyers into agreements with ballooning mortgage payments and even selling mortgage loans to third-parties shortly after closing. Know who you will be paying and working with before you move in.
(2) You need cash in the bank.
Exactly how much cash you need depends on a few things.
Earnest money –
If you are serious about making an offer on a particular property, you will have to put up some cash. They call this cash earnest money, money given to the seller to demonstrate your intent to buy. Do understand the earnest money amount is entirely negotiable, though $1,000-2,000 is common for the average single-family home. Let your real estate agent guide you, and trust your instincts. Don’t part with more than you have to, just yet.
Home inspection –
This is not a legally required part of the home-buying process, but it is essential. You must protect your investment by hiring an independent, licensed and reputable home inspector to ensure that your home-to-be was legally and safely constructed and that it is in good condition. Expect to shell out $200-400 for the inspector’s time.
Your mortgage lender must make sure the agreed purchase price makes sense. Is it worth it? You will pay for an appraisal – or estimation – of the property value, which can range from $100-250. This fee can be collected at any point after your loan is approved by the lender and your purchase offer to the seller is accepted. Be sure to work with your lender and to communicate any questions about financial expectations.
Closing costs –
The final act before you get the keys will likely take place at a law office. Here is where papers are signed and where you will hand over a hefty cashier’s check covering your down payment, any fees assessed by your lender and those collected by the attorneys. (Remember: for conventional home loans, a down payment 10-20% of the purchase price is standard.)
Here’s also where hiring a savvy real estate agent really comes into play. While it is common for the seller to pay some of your closing costs, it is totally possible to negotiate for the seller to cover all of your closing costs and to include such a request in your initial offer. Be forewarned; this is probably a negotiation tactic best used when the property is in need of repairs that could amount to your estimated portion of the closing costs. Success is less likely in extremely competitive markets. If there are several offers waiting in the wings and the paperwork has not been signed, he or she may move on to the next willing buyer.
How will you get your things from your old place to your new one? Will you hire movers or rent a truck? This perhaps the most variable cost factor in the entire equation. Be smart, but look for deals or consider moving your own belongings.
Once you move in, you will probably need electricity, water and internet service. For some of these, there may be a fee to initiate a new customer account. Consider placing calls to local providers for detailed information before move-in day in order to plan ahead.
(3) When you notice imperfections – and you will – that were missed during the home inspection, remain calm.
Your eyes will graze the ceiling a few dozen times before you notice that mediocre patch job. You will probably walk through the hall every day, smiling, until you realize it is actually sloping. You might love that natural breeze through the foyer until it costs a fortune to keep the house warm during winter. Buying a new home is a lot like settling into a new relationship. At first, you are overcome with excitement, and everything looks fantastic! However, unlike in marriage, no matter what you discover in your new home it is probably something you can live with or fix later, especially if it didn’t catch the attention of the inspector.
(4) When you start to wonder if you made the right choice – again, remain calm. This is normal.
Buyer’s remorse awful when you buy a really expensive piece of clothing that doesn’t fit. And it feels even worse when it’s your new home making you feel sick with regret. But trust me, it will pass. If and when it does finally sink in, the reality of financing such a large purchase can feel overwhelming, but remember that a home is much more than the walls surrounding it. Relax and focus on filling your new digs with good vibes, only. You worked hard for this.
(5) Settle in and learn to love your new home and its flaws… or fix them!
With time you will come to see your home’s caprices as part of its unique character and what make it special. Much like restoring an antique vehicle, tackling little projects of love around the house will gradually lead to a overwhelming sense of pride.
Have you recently bought a new home for the first time? What did you learn about the process?