I wish I could sit down with every single one of my clients or every homebuyer for that matter before they jump into a real estate transaction and make sure they understand these 10 things about buying a home. The problem is, many clients are taken on either halfway in the process, before they really done their research or as a simple accidental meeting at an open house or through another agent or friend.
The thing is, this is the most important financial decision you'll probably ever make and to not understand everything about it including the process and the repercussions is simply not wise. If you're planning on buying a home these of the 10 things I really want you to know before jumping in.
#1. Don't make a move without a real estate agent.
Too many first-time homebuyers simply tour open houses all by themselves and then go with whatever agent might be sitting the property. The problem is, that agent is usually trying to sell that particular home and may not actually have the best advice for a buyer that doesn't want that home. Using your own real estate agent when buying a home is really one of the best things you can do in order to get the terms and the price you want.
#2. Prepare yourself for the paperwork.
There are literally hundreds of documents you will need to sign, relinquish, produce and turn in before this transaction is completed. If you understand that there are more documents during a real estate transactions than buying a car or just about any other transaction under the sun, you won't be as frustrated when the escrow is calling for another signed document.
#3. The house you buy today might not be the one you live in forever.
Too many homebuyers, especially first-time buyers, feel that they have to get everything they want in their very first house. This is just not realistic and it's something that you shouldn't feel bad about. Perhaps your first home will be a condominium and then in a few years you'll be able to sell that condo and use the equity to Purchase a Larger Home. As a first-time homebuyer you need to think about resale value and what the future buyer would find attractive in the home you're looking at now.
#4. This is a commitment.
Just because this is not the house you plan on living in forever, it is a commitment for 5 to 10 years. You should find a home that will gain equity over the next few years, has potential in the neighborhood, school district or general community, and be prepared to pay your mortgage, taxes, homeowners insurance and interest for some time. Foreclosure, short sales or bankruptcies are red flags and black marks on your credit that don't go away for some time. Be prepared for the commitment that you're getting into.
#5. Look past cosmetics.
If the paint color is the only thing that is detracting from the house, understand that it is something very simple that can be changed. Try to look past the cosmetics of the house and understand the structure, integrity of the property and layout. These are things that are more expensive to change then simply paint color or removal of wallpaper.
#6. Don't go over budget.
I can't stress this enough. Too many first-time homebuyers get a limit of $400,000, more or less, and feel that is the absolute max that they have to buy in. Some homebuyers even look at homes over there max budget and hope to negotiate a lower price. Just because you can't afford a larger mortgage payment doesn't mean you have to max it out. Consider how nice it will be if you are approved for $400,000 but purchase a $300,000 house. The amount you're saving every month could go into paying down the mortgage faster or into home improvements. You won't be as stressed every month making that mortgage payment.
#7. Homeownership is more than just a mortgage.
When you choose a home you don't just pay the mortgage payment; there's mortgage plus interest, taxes, homeowners insurance, utilities and then any item that will need to be fixed or replaced. This is far different from renting. Once you own a house, you are responsible for the upkeep and maintenance. (This is where not maxing out your mortgage budget can really come in handy).
#8. Student loans are real debt.
20 years ago having student debt wasn't considered that big of deal when it comes to buying a house but today, changes and revisions in mortgage guidelines can negatively affect many first-time homebuyers with mounting student loan debt. If your student loan is currently in deferment and you're planning on buying a home, make sure you enroll in properly documented income-based repayment plans so you have documents to provide to your lender so they can assess your ongoing liability. [Forbes]
#9. Tax benefits are sort of good.
While homeownership is good for taxes it's not the end all. You won't be saving thousands of dollars in mortgage interest deduction every year as only one third of taxpayers can actually itemize this deduction. Most homeowners will take the standard deduction, which usually covers your mortgage interest.
#10. It may simply not be the best time to buy a house.
I know, I know, you're thinking I must be crazy to say this as a real estate agent, but listen, if it is not the time to buy a house, if you're planning on moving, preferred the low maintenance of renting, or simply don't have the down payment, it might be a better idea to just wait until you are ready. There are better times in the industry to buy, and while this is a great time to do so before interest rates rise, it just may not be the right time for you. It's okay to wait, save your money, and feel more confident about your purchase later on.
For more information on buying a home, Columbus real estate of which I am an expert, or answers to any of your real estate questions feel free to contact me today.