What is one thing first-time homebuyers should take into consideration before purchasing their first home?
To help you take the right things into consideration as a first-time homebuyer, we asked homeowners and business professionals this question for their insights. From being patient with the market to calculating your monthly payments, there are several things to consider before purchasing your first home.
Here are 12 considerations for first-time homebuyers:
- Understand the Time, Energy, and Money Investment
- Know All the Mortgage Options
- Get Financial Protection
- Calculate Added Monthly Expenses
- Be Patient With the Market
- Consider Different Homeowners Insurance Options
- Decide Between Building or Buying
- Don’t Skip the Home Inspection
- Be Aware of the Hidden Costs of Homeownership
- Talk to Lenders Long Before Making Offers
- Lower Upfront Costs With Financial Programs
- Keep a Budget for Maintenance and Repairs
Understand the Time, Energy, and Money Investment
Too many home buyers underestimate how much time, money, and energy it can take to decorate or redesign a new home. You may want to tear it all down and start fresh once you close, especially if it’s a resale house.
As for new builds, the costs of choosing cabinets and counters and the rest can all add up. Just bear in mind that you don’t have to have it all figured out right away. Live in the house a bit to see what works, and go from there.
Alisha Taylor, Alisha Taylor Interiors
Know All the Mortgage Options
First-time homebuyers need to consider whether a fixed-rate mortgage or one with a variable rate works best for them. They should also consider how long they want the loan term to be.
You can go with a 15-year fixed-rate loan, but you’ll have a bigger monthly mortgage payment. A 30-year variable loan could result in lower monthly payments, but it is at the mercy of fluctuating interest rates.
First-time homebuyers need to research all available options to make the best decision. Their realtor can also refer them to a loan professional for personalized advice.
Lily Yu, Oak Springs Realty
Get Financial Protection
Most first-time homebuyers may not consider the significance of life insurance. While it’s difficult to think about the financial risk associated with death, it’s important to think about the risk as it relates to your family. Homeownership comes with very sizable financial obligations such as an extended mortgage, often 30-years.
Anything could happen within that 30-year time period. Don’t wait until it’s too late, get the financial protection that only life insurance can give when it comes to an unexpected death and loss of a substantial source of income.
Chris Abrams, Abrams Insurance Solutions
Calculate Added Monthly Expenses
First-time home buyers are understandably excited at the prospect of owning their own home, but they need to think about how much they can take on in terms of monthly expenses.
There is the mortgage payment, sure, but a bigger space also means utility costs will increase and the cost of repairs also falls on homeowners. Can they handle all that? If so, then they’re good to go.
Vicky Franko, Insura
Be Patient With the Market
These days, supply chain and staffing issues have led to significant delays in construction across a number of industries, and home builders haven’t been immune. What this means for first-time homebuyers is that move-in ready houses are in short supply, and new construction homes may take longer than expected to build.
Be patient as the market adjusts and adapts. If you’ve already purchased a home, steel yourself for messages from your builder about expanded timelines for finishing and closing. It’s not just you; it’s everyone.
Rod Cullum, Cullum Homes
Consider Different Homeowners Insurance Options
There are many options for homeowners insurance, and you can’t get out of getting it. Mortgage lenders require it before finalizing your loan. But, not all homeowners insurance coverage is created equal.
Be sure when shopping for insurance that you’re getting coverage for the value of the home, especially with regards to rebuilding or repairs. And, revisit your coverage year after year as your home’s value increases to be sure all is covered.
Brandon Berglund, Berglund Insurance
Decide Between Building or Buying
Depending on the market, and depending on what you are looking for, building your dream home might be the better alternative for you. As part of the building process, it’s important to consider which contractors you will use and where you can source materials and special services for a reasonable price. Homeownership is an expensive investment so consider where it makes more sense to spend more or less money. Our stone veneer panels are stunning and affordable for your next home building and remodeling project.
Todd Sriro, Be.On Stone
Don’t Skip the Home Inspection
The market moves overwhelmingly fast right now so that anyone going through the home buying or selling process has many big decisions thrown at them quickly. Often, parts of the process, like home inspections, are getting skipped to make sales close fast. Having gone through this process a few times now, even in this market, it will be tempting to jump on the bandwagon.
My advice is to hold firm on getting a home inspection. This allows you to: (1) get to know the property and what to expect when you move in, (2) ask the homeowner to make any repairs or provide funds to do so, and (3) have the opportunity to exit the process should you decide the condition of the home is more than you can handle.
It may mean that some offers will fall through in favor of a more expedited timeline, but you won’t regret the chance to have an expert comb through the house. Trust me, the right home will pop up. As your first home, it’s critical to know what you’re investing in.
Meryl Schulte, Markitors
Be Aware of the Hidden Costs Of Homeownership
There are many hidden costs associated with homeownership that many first-time homebuyers are unaware of as they calculate the total cost of their endeavor. On average, homeowners pay around $2,000 annually for the maintenance of their property. In addition, homeowners are required to pay an annual property tax that should also be taken into consideration.
First-time homebuyers should also be aware of any costs associated with their HOA if this applies to their property. These hidden costs may prove to be overwhelming for first-time homebuyers who are unaware before purchasing the property and should be calculated into their monthly and annual budgets before doing so.
Than Merrill, FortuneBuilders
Talk to Lenders Long Before Making Offers
Speak with a few lenders as far in advance as you can so they can help you overcome any hurdles before you watch a house you want slip through your fingers. Good lenders will teach you how you can qualify for better rates, help you fix your credit score, give you direction on price ranges to look in, and explore programs that might fit your particular situation better.
There are some programs that qualify for no down payment whatsoever and others that provide incredibly low-interest rates if you can do a higher monthly payment. The more time you have to explore options, the better off you’ll be when it’s time to make an offer on a house you fall in love with.
Phil Bryson, Desert Pro Home Buyers
Lower Upfront Costs With Financial Programs
As a first-time homebuyer, there are many programs available to reduce the financial burden of purchasing your first home. For first-time buyers with good credit, the HomeReady program comes with reduced PMI (private mortgage insurance) and a competitive interest rate along with a low down payment (3%). Ask your mortgage lender about available programs you may be eligible for before purchasing your first home.
Liz Hutz, Cash Home Buyers North Carolina
Keep a Budget for Maintenance and Repairs
Too often, first-time homebuyers exhaust all of their savings and cash on hand to purchase a home. Then when a large repair comes along, they have no money.
It is something that is forgotten because when renting, repairs are taken care of by the landlord. Or if living with parents, they take care of maintenance and repairs. It is important to keep a decent amount of money aside for repairs.
Denise Supplee, Spark Rental