The most important thing prospective buyers can do is be financially prepared as early as possible. Before even starting to look for a home, save as much money as possible for a down payment, clean up your credit report and get preapproved for a loan. Upfront preapproval letters help give the seller confidence that the buyer can close the loan and obtain the necessary funds. Buying a home takes patience and preparation and if you’re a first-time buyer, make sure to consider these six things:
- A Down Payment is Never a Bad Investment
Even if you qualify for a loan that doesn’t require any money down, you need to make the investment because it minimizes your risk and lets you start off with some equity, in case the market downturns. Forbes suggests the gold standard for buying a home is to put 20 percent down. If you’re competing against buyers for a house, an offer with a down payment will look stronger to the seller. You’ll also have more leverage during negotiations. Before buying, strongly consider what kind of personal and financial sacrifices you’ll have to make. If you don’t have enough money saved up, it might be better to wait awhile.
- School Districts Zoning is Important
Even if you don’t already have kids, it really pays to check out the surrounding school districts in the area you want to buy a home. If the property falls into a well-sought after school district, it raises the property value, making resale more profitable. If you plan on having children, you’ll want to evaluate the schools they’ll be zoned for. If the schools are low-budget and poor quality, your child may not receive the education they deserve. If good public schools are outside of your designated zoning, you can sometimes get special permission—but you should check first. If you’re looking into private schools, you’ll want to make sure the commute is doable.
- Consider Building Plans Surrounding the Property
There’s nothing like buying a brand new home with open property surrounding it only to find out a shopping complex is scheduled to go up in the next few years. Noisy construction, detours and a decrease in property value are all things to consider. If you have a short, easy commute to work but in the next few years the entire interstate is going to be renovated, you’ll want to consider that ahead of time.
Cities often make plans for the future in advance, so inquire about future plans for your property or neighborhood to avoid surprises after you move in.
- Decide What Makes a Great Neighborhood
Everyone’s preferences of location are different—some like the hustle and bustle of the city life with convenience at their fingertips and some prefer to live quietly on the outskirts of town. Before looking for a new home, consider what makes a great neighborhood to you. Does the convenience of cheap grocery stores, 24-hour gyms or access to good shopping make or break it? You’ll probably want to make sure your top deal breakers are easily within a five-to-ten minute drive.
- Dig Deeper During Inspection
Home inspections are very important in the process of buying a home. First-time buyers who are looking to cut costs by not paying an inspector to flag defects of the property are risking thousands of dollars in damage down the road. It takes a trained eye to be able to see the problems that can exist in a home and buyers should tag along and ask questions. Buyers should also do their own inspection and research as there are conditions specific to certain areas. For example, buying a home in an area with soil issues will require a separate foundation inspection by a specialist.
- Don’t Commit Before You’re Ready
Buying a home is a huge commitment, one that comes along with property taxes, homeowner’s insurance, HOA fees and other monthly fees. Make sure you’re financially and personally ready for such a large commitment and know exactly what you’re getting yourself into. Despite all the good that comes from owning a house, sometimes renting is more financially responsible. Buyers have to consider all of the expenses renters never have to worry about. First-time homebuyers have to be prepared for all of the unseen upkeep costs.
While there are many other tips for first-time buyers, following these six tips will help to ensure a smooth, enjoyable process.