Buying your first home can be challenging. General recommendations are to buy a condominium or a town house if this is your first home purchase. Many argue that condos are not only affordable but also easy to manage, since they have condo associations and boards that handle many maintenance issues. Here are tips on buying a first home.
Things You'll Need
- Money (at least $15,000) for down payment (optional)
- Good credit history
Do your homework. Decide how much you would be comfortable paying monthly. The standard is to have your monthly payments no more than one-quarter of your net monthly income after taxes.
Define whether you would be able to put money down at the time of closing, if yes, how much? It's important because down payments will not only lower your monthly payments but may also decrease your chances of paying a substantial PMI (Private Mortgage Insurance).
Shop for the best mortgage and rates on the Internet. Check the deals offered by your primary bank as well.
Get pre-approved for the mortgage amount that is above your budget. Get the maximum amount possible. This generates more enthusiasm in the real estate agents who will be working for you.
Forward your pre-approval letter to your real estate agents before beginning your hunt for a home.
Locate areas that would be convenient for you and your family. While doing so keep in mind following points: approximation to your work, kid's schools, grocery stores, train station, bus stand, safety of the neighborhood, etc
Short-list only few areas where you and your family would like to live on long-term basis. Do not search homes in the entire state--you will only waste time. In big cities where there is no limit to the available houses for sale you could get frustrated.
While making the list of houses take opinions from all the members of family who would be sharing house with you. Involve everyone in decision making.
Short-list 2-4 houses. See each house more than once. Real estate agents would not mind showing you the same house multiple times if they know that you are a serious buyer. See each house in different times of the day. it gives you an better idea about things such as amount of light, view etc.
When you have finally found what you are looking for do not waste time--make an offer. Keep in mind you are not the only one who is seeing this property. This property is on public display and is in the records of multiple agents.
Tips & Warnings
- Work with no more than 1-2 real estates agents. Having too many agents not only frustrates you but also makes you less focused.
- If you are buying property from a listing agent you may get a better bargain than when you buy through a 'non-listing' agent. The reason being that when there are 2 agents (listing and the non-listing agent) between you and the seller the commission splits between two of them, but when there is only one agent then sometimes, for the sake of selling the property fast the listing agent may decrease his commission and you may get it as a hidden credit for in the form of a better bargain from the seller. Remember its the seller who pays the commission not the buyer.
- When buying a condo or a town house always keep an option of renting it, so check that the bylaws of the property allow you to lease the condo. Also check the condo's association fees.
- Check escrow to see how much tax the previous owner has paid in the last fiscal year. Taxes may significantly increase your monthly payments keep that thing in mind before buying.