Sooner or later, almost every couple is going to take the journey into homeownership. If you’re like Michael and I, you may even start that journey a year and a half before you get married. But either way, it’s likely going to happen, and it can often be an exciting yet stressful experience.
Michael and I have been homeowners for about 2 and 1/2 years now, and we’ve definitely learned a lot since we purchased back in spring 2009. I can’t count the number of times we’ve said, “Man, I wish we noticed that before we bought the house,” or “Our next house will definitely have _______.”
So, in an attempt to help other first time home buyers like Michael and I once were, I’ve compiled our list of tips, in addition to some tips from other homeowners and home buying experts. I really hope this helps!
Before You Look
1. Make Sure It’s the Right Decision.
Investing in a home is a big decision, and a lot comes with homeownership, so it’s important to first make sure you’re ready. Consider important factors like how long you plan to live in the home you buy and how prepared you are to maintain a home. When you’re renting and something breaks, all you have to do is make a phone call down to maintenance, but when you own, it’s on you to either fix it or hire someone who can, and depending on the problem, it can get pretty costly…make sure you’re mentally and financially prepared to handle those situations. The New York Times has a great Buy v. Rent calculator that will also help you figure out which option makes the most financial sense for you right now. And as Elliott Robinson of Wisdom in Love suggests, make sure you and your significant other are in agreement.
2. Get Your Finances in Order.
If you’re considering buying a home in the future, make sure you’re being cognizant of your finances. Make sure to do things that keep your credit score high (like paying bills on time), and don’t make any other large purchases (such as financing a new car). As realtor Katya Dennis mentions, making any large financial transactions too close to purchasing a home may affect your ability to get a home loan. Also be sure you have money in the bank to cover a down payment (3.5% is the lowest you can put down), closing costs (unless you negotiate the seller to pay them), and furniture, appliances, etc.
3. Determine Your Budget.
Before you look at any houses, it’s essential to get in touch with a mortgage broker to determine what you can actually afford. Katya stresses the importance of getting pre-approved for a loan before you begin looking. Also keep in mind that this number will be the highest sale price you can afford; it doesn’t mean you need to buy a home this costly.
Real estate broker Larry Tollen encourages couples to buy below their means. As he said, “Lets say your lender prequalifies you for a home up to $200,000; just because you can afford this much doesn’t mean you have to. A general rule of thumb I suggest to my buyer clients is to try and find something you like that can be purchased for 10-15% less than the maximum amount you could afford. In the long run you’ll be much happier, you’ll have money to go out occasionally, to buy furniture for you new home or to use towards improvements you want to make.”
Elliott offers additional great advice which I can surely attest to, “If possible, obtain a place that can be paid for on the salary of one spouse.” Let’s be honest, the economy is not good, and no one’s job is 100% guaranteed, so you’re really covering your own backs if you follow Elliott’s advice.
4. Choose Your Agent Wisely.
Fellow homeowner and bridal consultant Catharine Han stresses the importance of finding a buyers agent as opposed to contacting the listing agent of any home you may be interested in. As said says, “The listing agent is working for the seller of the house.” He/she will not be able to be objective enough to tell the seller if something needs to be fixed or if they can cut the price because renovations need to be done. You need someone on your side, and it needs to be a reputable agent you can trust.
5. Make Lists.
As Katya mentions, it’s a good idea to make a list of everything you want and don’t want in your home. Set those in order. Main things that you can’t live without go in your “must have’s” list, and the things you absolutely can not stand go in the “can’t have’s” list. In the third column, write down your “wants”. These are things you’d like to have but you can still live without. Keep this with you when you’re visiting homes.
6. Choose the Area(s) in Which You’d Like to Look.
Location, location, location. Before looking at any houses, let your realtor know the area(s) in which you’d like to live. Take everything into consideration — proximity to restaurants, shops, etc., crime rates, school districts (even if you don’t have children yet), the stability of the neighborhood, and the distance of each area from you and your beau’s work places. As Elliot said, “If you select a location that creates a long commute for either or both spouses, then you’re lessening the time you spend together. You’re also adding an additional stressor to the marriage in the form of ‘commuter fatigue.’”
During Your Search
7. Be Realistic.
Remember when I told you to make a list of everything you want and don’t want in a house? While that’s very important, it’s still essential to also be realistic when you’re searching. As Larry says, “This is your first home, not a showcase dream home. Statistically, you’ll likely sell this home within the first 5-7 years of purchasing it, and you’ll want it sold as quickly and for as much as the market will bear when that time comes.”
8. Communicate with your Realtor on Every Property You See.
As Katya says, let them know how high on your list this home is. Ask questions; your realtor deals with homes day in and day out, and he/she will be able to give you all the necessary information or know where to get it. Finally, be patient but prompt, as there are many people involved in the transaction and it is not instant.
9. Focus on What Really Matters.
Don’t worry as much about things that can easily be changed such as paint, counter tops, floor coverings, etc. Larry stresses the importance of focusing on the big stuff, such as the heating and cooling systems, roof and structural issues. Before you buy anything, hire an experienced home inspector (Larry will only recommend ASHI certified inspectors to his clients) and have a termite inspection. It costs a lot more to fix an air conditioner when it dies or a roof when it starts to leak than to fix ugly paint on the walls. Plus, these more major problems will need to be fixed immediately, and you’re going to need to come up with the money right when they happen.
10. Look Closely.
Of course, sellers want someone to buy their house, so they’re going to try their hardest to cover flaws and make the house look as perfect as possible. In our case, we didn’t learn until we started living here that there were a lot of little things to be fixed. For instance, the sink and toilet in our bathroom are both very poor quality and thus, they need to be replaced. The plumbing is original, so it is slow to drain and will likely need to be replaced in the future. These are things we didn’t really see when we looked at the house, because we just weren’t looking for them.
11. Think Long-term.
As Catharine notes, you may think that you will only stay in a home for 5 years, but depending on the economy you might end up staying there longer that you thought. So if you are planning to have children within the next 5-10 years, plan to have enough room for your growing family.
After You Buy
12. Stop Watching HGTV and Start Watching DIY.
Invaluable advice from Larry who says, “There’s no better way to build up equity in your home than good old fashioned sweat equity. Over the past decade, I have been surprised at the number of first time buyers I’ve worked with who seem to think sweat equity is a dirty word. They want to move into houses that are perfect with everything already done for them. I bought my first home before I was twenty years old, and like most twenty year olds, I had more time than money, and if you’re reading this article than you probably do too. Learn how to do basic things like installing a laminate or tile floor, replacing light or plumbing fixtures, and painting. Heres a hint: there is no single greater return on your money than a high quality paint job. Learn to paint well and your home will always impress people.”
Alright, those are our tips, but what are yours? Share your experiences and the lessons you’ve learned in home buying!
[Photo by Images_of_Money. Used under Creative Commons.]