Buying your first home is a big investment. Make a mistake and it can cost you hundreds and in extreme cases thousands of dollars. This is why every homeowner should be equipped with a few rules of the road before they begin house hunting. Here are some buying tips for first time homebuyers.
If you’re considering buying your first home, the first thing you’ll want to do is consider your lifestyle and your needs. While urban areas offer a greater variety of social, culture and career opportunities than rural areas, you should consider the needs of your children or the needs of a growing family. Suburban neighborhoods provide flexibility with a better opportunity for kids to play outside, have a garden or enjoy a neighborhood environment that’s not available in many urban areas.
And owning a home isn’t just about paying a monthly mortgage. You’ll also need to determine if you can afford additional expenses that come with owning a home like property taxes, home repairs, association fees, utilities, lawn care, etc. Before moving into a new area consider these expenses as well as transportation costs to and from work, school tuition and other everyday living expenses.
Many first time homebuyers wonder if they should build a new home or renovate an older one. If you’re handy, have the experience and enjoy doing renovations on your own (and it won’t adversely affect your marriage!), renovating an already established home may be a worthy investment provided you’ve done your research and can afford such a project. By the same token, having a home custom-built is also expensive. It’s important to do your research before signing with contractors in either case.
When you find the house that’s right for you, you’ll want to work with a reputable mortgage lender. Depending on your credit score, certain points, PMI (private mortgage insurance) and closing costs will apply. It’s important to understand the factors that contribute to your monthly payment. Don’t be afraid to ask your lender questions, read all the clauses and fine print before you sign.
Two of the best ways to protect yourself as a first time homebuyer is hiring a buyer’s agent and getting a home inspection. A buyer’s agent can work on your behalf to get you the best price and terms when purchasing your new home and can help explain the legal jargon and real estate terminology. And the only way to know the true value and condition of the home is with a reputable home inspector. While most home inspections cost between $300 and $600, it’s money well spent when you consider the thousands it could save you if the home has major issues and isn’t up to code.
Another way to protect yourself is by purchasing homeowners insurance. With a good home owner insurance policy your investment will be protected and you’ll never have to worry about anything bad happening to your home, and you not being able to fix it. While home owner insurance doesn’t cover all incidents, it takes many of the things that can go wrong out of the equation.
Finally, first time homeowners should know if their property taxes will be rolled into their monthly mortgage payment or if they will be responsible for paying them annually. First time homeowners should keep paperwork for annual federal and state income tax returns as they can often deduct property taxes, points and interest paid on a mortgage. First time homeowners can learn more about the restrictions on such deductions when they set up a consultation with a tax accountant.