Buying a home is a big project. You need to know the rules of the game and get in shape before setting off on an adventure which will inevitably demand you to through challenges to reach the finish line.
1. What To Expect When Buying a Home for the First Time
In 2021, winning the house market game will require understanding how you are positioned like a buyer and preparing to compete with other buyers. As the global pandemic isn’t going away anytime soon, you’ll likely be in for a socially distanced version of the homebuying process including virtual home tours, e-closing and Zoom meetings
If you find a reasonably priced house in good condition that just hit the market, you still won’t be the only one making an offer because it is a seller’s market in just about every part of the country, meaning there are more prospective buyers than homes for sale.
Real estate experts expect home prices to go up this year, but not as fast as they did last year. According to the National Association of Realtors and the Mortgage Bankers Association, prices of existing homes are projected to increase approximately 3% which is much better than 6.7% jump from 2020.
Prices also vary by season. According to a NerdWallet, homes are generally most expensive in June and July and cheapest in January and February,
2. Home Buying Mistakes To Avoid
Despite the unprecedented circumstances, year after year, first-time home buyers end up making the same mistakes that their parents, siblings and friends made when they were in their shoes.
Not figuring out how much you can afford
You could end up looking at houses that you can’t afford or visiting homes that are below your optimal price level, wasting time in both cases.
Not looking at first-time home buyer programs
There are plenty of low-down-payment loan programs out there, including state programs that offer competitive mortgage rates for first-time home buyers and assistance.
Emptying your savings
If you buy a previously owned home, it will almost inevitably need an unexpected repair soon enough. Many make the mistake of accounting only for the down payment, closing costs, and moving expenses while repairs can be quite costly. Also, you need to account for the costs of homeownership as monthly bills will add up quickly.
Applying for credit before the sale is final
Wait until after closing to open new credit accounts or make any large purchase such as furniture, appliances, or tools. It’s ok to look and pick them out ahead of time but don’t buy them, on credit or in cash, until after you receive the keys to your new home.
Shopping for a house before a mortgage
Talking about your finances with a lender is no one’s favorite past time activity so many first-time home buyers end up looking at houses instead and end up disappointed when they discover they cannot make an offer.
3. First Time Home Buying Tips
In order to prevent making some common errors, it’s best to prepare for the home buying journey with some best practices.
Start saving early
As difficult it might seem, savings is all about analyzing every single line of expenses within your budget. For example, if you live in a deregulated area, you have the power to choose your electricity provider, so it is wise to shop and compare providers in your area. The affordable rates can save you a significant amount of money from your utility bill, especially if you inspect the home to make sure that it is insulated and sealed.
Compare mortgage rates
Even though rates are generally low this year, it’s still important to shop around for a mortgage and compare rates and fees. The rate you’re offered will depend on your history and financial circumstances. It pays to compare offers as mortgage interest rates vary from lender to lender, and so do fees such as closing costs. A typical borrower could save $430 in interest just in the first year by comparing five lenders, according to Nerd Wallet, yet very few people do it – don’t be one of them.
Make the most of open houses
Open your senses when seeing a home in person. Listen, pay attention to any odors and look at every detail inside and out. Ask questions such as the electrical and plumbing systems and the roof.
Like any big project, a successful homebuying experience is all about getting the details right from start to finish. It’s about navigating the process one step at a time. Like with any success story, preparation is everything.