Home Buying Advice: 7 Things I Wish I Knew Before I Bought My First House
Buying a house for the first time? We’ve been in your shoes and have experienced all of the emotions that come with buying a house for the very first time. Many of us bought our first home well before we started a career in the mortgage industry and have a few lessons to share from our experience. To help you save time, money and unnecessary stress when buying your first house, here are a few words of wisdom from members of our team who have been on both sides of the home buying fence:
- Do your homework. Looking back at my first time buying a home, I wish I would have spent a little more time learning about the process and a little less time searching for the perfect house. Take the time to get educated on the home buying process, real estate trends and how to find a mortgage lender and realtor you’ll enjoy working with. The more information you can obtain upfront, the better prepared you’ll be to make decisions regarding how much you can afford, what types of houses you’ll look at and the type of mortgage loan you want. You’ll spend less time going in circles and more time looking at the right homes.
- Find a great realtor to represent you. I bought my first house when I was 22-years old. Although I was excited about buying my first home at the age of 22, I did not know much about the process and wasn’t prepared to handle the qualms of buying a house by myself. I didn’t have a realtor to represent my needs and guide me through the process. Having a realtor on your team is critical for a smooth home buying experience. Not only can they help you find houses that fit within your criteria, they can represent your needs and facilitate seller negotiations. Even after 25 years of working in real estate and buying and selling houses, I still have a realtor represent my needs.
- Start the pre-approval process early. As a first-time homebuyer, my eyes were bigger than my budget and I started looking at homes outside of my price range. If I would have started the pre-approval process sooner than I did, I would have spent less time looking at homes outside of my price range and more time looking at the right ones. Getting pre-approved for a mortgage is a relatively quick and simple process. By providing mortgage lenders with a little bit of paperwork, they can help you determine how much you’re eligible to borrow. It’s important to remember that just because you’re eligible to receive a certain amount of money, doesn’t mean you should take on that much debt. Work with your lender to determine how much you can reasonably afford to borrow and find a mortgage loan that fits within your financial plan.
- Find a house you can afford and put money aside for property taxes and homeowner’s insurance. It’s important to find a house you can afford. My husband and I based the amount we wanted to pay on our normal income and excluded any overtime or bonuses. When the recession hit, his overtime dried up and my bonus went away, but due to our conservative approach, we could still afford our monthly mortgage payments. It’s also helpful to make sure your property taxes and homeowner’s insurance is set up as an escrow. If those items are not put into escrow and paid monthly, you’ll receive a large bill that you will be required to pay in one lump sum. You shouldn’t assume you’ll have those funds readily available when your property taxes or homeowner’s insurance is due.
- Consider your options. Deciding which mortgage loan to get goes far beyond deciding whether to get a fixed-rate loan or an adjustable rate loan. There are many different types of loan programs that a lot of first-time homebuyers aren’t aware of, including FHA loans, 203(k) loans, VA loans and Rural Development (RD) loans. It’s important to find a loan officer that will carefully listen to your situation and help you find a loan that fits your home buying needs. Providing details about your financial situation can help give lenders insight into which loan programs you might qualify for. For example, if coming up with a down payment is a struggle, you might consider VA loans if you are a veteran or an RD loan if you are shopping for homes in a rural area. If you aren’t satisfied with the quality of homes on the market, you can use a 203(k) loan to finance a house and make desired improvements under one loan.
- Consider the pros of conventional financing. Contrary to popular belief, you don’t need a 20% down payment to buy a house. There are plenty of low down payment loan programs available, and just because you have limited funds for your down payment doesn’t mean you can’t still apply for conventional financing. With conventional financing, you could greatly decrease your monthly mortgage insurance expense and eliminate upfront mortgage insurance costs all together.
- Find a loan officer that cares about you. When I bought my first home, I didn’t know very much about mortgages, how to qualify for one or what financing options were available. I knew I needed to find a loan officer that would spend time with me one-on-one to thoroughly explain how the mortgage process worked. After a couple of weeks trying to find a loan officer by myself, I finally asked my realtor for a referral—and I’m glad I did! She introduced me to a loan officer that was wonderful to work with. They offered to meet with me in the evening, took the time to educate me about the mortgage process and presented me with all the financing options I qualified for. The moral of this story, and the best advice I can give to a first-time homebuyer, is to make sure you have a great team working for you. Your realtor and loan officer should be attentive to all of your needs and go out of their way to make you feel comfortable with the process.
Whether you plan on buying a house this summer, or it’s a few years away, we hope you learned a few things from our first home buying experiences.
Have you bought a home before? What advice would you give to first-time homebuyers?
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