Making the move from being a renter to becoming a homeowner can be a scary process. Before you make that leap, here are some tips to help you avoid many mistakes first time home buyers commonly make.
Get pre-approved by a lender before you look at the first home or talk to the first real estate agent or seller. Check with family and friends to find a competent lender and make sure you are comfortable dealing with them before you get into the stressful part of the home buying process. Getting the loan to purchase a home can be the hardest part of that process. Get it out of the way before the pressure starts and you will be amazed at how easy the rest of the process can become.
Once you have an idea of the sales price the lender will approve you for, then back down from that until your payment will be less than 25% of your take home pay. The lender will use your gross income before taxes to qualify you and will generally approve you for a much higher loan amount than you should have for your first home. Get your lender to give you a pre-approval letter for this lesser amount. Keeping your payment lower will help you to avoid getting into financial trouble over maintenance and repair costs later.
Once you have settled on a lender, start gathering recommendations for a real estate agent to hire to represent you in the purchase. Don’t go to the agents who are representing the sellers. They cannot effectively look out for your best interests. Find a buyer’s agent who specializes in helping first time home buyers. Get some references from them and talk to those people.
Once you have hired an agent, let them help you locate areas in your price range. The agent may seem to be asking too many personal questions at this point, but his or her goal is to get to know you well enough to be able to make good recommendations about homes you should take a look at. The biggest mistake many people make is failing to establish a solid relationship with one agent. They call around to many agents and then end up with no one truly representing their interests.
Once you have located a home, do not let your emotions control your actions. Yes, you are excited about owning a home, but that leads to a tendency to move too quickly and miss potential problems that could hurt you later on. Move slowly, ask a lot of questions and do a lot of double checking before you commit yourself to buy.
Buying your first home is a time filled with excitement and emotion. Remember to keep those emotions in check until after you move in and you will be much less likely to make any bad decisions that might cause you to regret that purchase.
