Last Updated on January 21, 2021 by Eric
When purchasing your first home, there are some things you should consider. This is, after all, one of the most important purchases you will ever make in your life, and the decisions made here will affect you for years to come. In this article, we will go over some of the main “I wish I knew before..” items.
The Realtor
The first thing we would like to clarify here is a specific stigma regarding hiring a realtor. It is usually thought that the realtor gets a cut of the sale, so the price goes up. This in fact only affects the seller, not the buyer. To add to this, if you don’t have a realtor on your side, the listing agent will simply receive both commissions that were already worked into the sale price. In this, it is smart to go ahead and start working with a realtor who has your best interest in mind.
Paperwork
There is going to be a lot of paperwork to go through and sign in the buying process. This paperwork is actually, for the most part, contracts. There is always room to negotiate these contracts, even if presented to you as “standard”. Your realtor will help you through the negotiation process especially if you have concerns or need more time to get things done (testing, inspections, etc) before signing.
Lender Shopping
Shopping for a home mortgage is a game of interest rate and loan term shopping. It is wise to spend just as much time shopping lenders as you do the house itself. Even incremental changes in interest rates can equate to large sums of money by the end of the mortgage term.
Think Long-Term
Finding your dream home should include forethought into how your life will evolve. Shopping for your needs today may not necessarily be the best overall approach to a place where you may very well spend the rest of your life. Keep long-term plans in mind.
The Financial Transition
There should be planned financial wiggle room for even the most thought out of plans. There is a chance that your final rent check (or two) overlaps with your first mortgage payment, moving costs are higher than expected, or a plethora of other items that are unforeseen. While this is something of a guessing game, some form of financial padding and the mental preparedness for such events should both be on hand.
The Financial Reality
Well, keep your finances rooted in reality. Mortgage companies may very well approve you for more than you can actually afford. It is up to you to make sure you are actually shopping within your means. This should also include some forethought into the fact that your work or financial situation may very well change down the road. By all means, get the home you want, but make sure the dream doesn’t go up in smoke due to overextending yourself.
There Will Be Problems
During the inspection process, home inspectors will find problems – it’s literally what they do. Most times the seller will offer to cover these expenses. However, it is important to get your own estimates for these repairs as the offer may not be enough. A few small items needed and you’re offered $4400 to fix them? No problem! Until you find out the repairs are twice that, then you’ll wish you would have investigated a bit further. Just be prepared to understand that problems will be found, and it is ultimately up to you (and your realtor) to negotiate those repairs.
In conclusion, home buying is a huge undertaking and can be extremely rewarding. It is a life-changing event and those on that journey should understand some of these nuances of the process.
