Things to Know Before Buying Your First Home

Things to Know Before Buying Your First Home

1. The cost  of owning a home is more than simply the purchase price. There are several monthly fees and expenses in addition to your monthly mortgage payment that you need to be prepared for. This includes insurance, property taxes, utilities, and maintenance. However, the costs associated with owning your first home are bearable. 

2. Programs are out there for first-time buyers. A significant down payment is never a bad investment- it gives you instant home equity and a lower monthly payment. But, if you can't manage to get a larger down payment, you don't have to give up your dream of home ownership. There are many federal, state, and local programs dedicated to helping first-time homebuyers with down payments, interest rates and loan terms. 

3. Foreclosures and short sales can be great deals but proceed with caution. Many homebuyers have gotten great deals on these types of homes. However, buying a foreclosure or short sale can come with some red flags. Most of these homes are sold "as-is." Since maintenance isn't always a top priority for homeowners facing foreclosure, these properties may need a significant amount of work. With short sales, transactions are lengthy and more complicated than a typical home purchase.

4. Getting pre-approved for a loan gives you more buying power. Before you begin your house hunt, be sure you have a pre-approved letter which proves that a lender has offered you a specific mortgage. This is important because it establishes your maximum purchase price, shows sellers you're serious about buying, and if you get pre-approved by several lenders you can compare interest rates and terms to find the best deal.

5. School districts can affect property value. Even if you don't have kids, buying a home near good school districts can help your home's resale value. The most important aspect of a home's value is the neighborhood it's in. If you cannot afford these neighborhoods, look for fixer-uppers in the area. They may need work but they will have built-in property value.

6. Do your homework to help make a competitive offer. Before you make an offer on a home, crunch the numbers to figure out the property's market value. Have your agent do a comparative market analysis where he or she will compare the home you want to buy to recently sold homes in the area with the same square footage, construction, age, etc. The analysis will show you what buyers were willing to pay for similar homes in your neighborhood giving you a good starting point.