For recent college graduates and young adults who are in the process of starting a new chapter of their lives, buying a home may seem intangible. However, it’s never too early to consider home ownership. In fact, it’s a great way to build long-term wealth. Here are five tips for first-time homebuyers.
1. Find The Right Realtor: In the technology age, it is not uncommon for many homebuyers to attempt to find a home on their own through the help of the Internet. However, for first time homebuyers, it is important to invest in the help of a professional. Licensed realtors are experts in finances, inspections, pricing, negotiating, and most importantly, finding their clients a dream home. It is easy to find a great realtor through websites, local advertising, and from recommendations from people in the community.
2. Find The Right Home: When searching for the right home, homebuyers should consider not only the characteristics they are looking for in a home, but also what is practical for their individual situation. Price, location, design, size, and amenities should all be considered. Homeowners should prioritize which features within the home are most important and which they can do without. If the homebuyers have intentions to live in the house for an extended period of time, they should consider which features they will need in the future.
3. Pay Off Debt: The most common challenge for first time homebuyers is saving up enough money for the down payment. In order to do this, many people will choose to save money rather than paying off previous credit card debt. However, a better strategy is to pay off debts before saving for a house. By eliminating debts, homeowners may be able to save more money and maintain a better credit score.
4. Configure Finances: It is crucial for first time homebuyers to figure out how much they can actually afford before taking the plunge into buying. Typically, the annual mortgage payment, insurance, and taxes should not exceed 28% of the homeowner’s gross income. Homebuyers should also have enough cash to pay for the down payment, with extra to pay off closing costs or any repairs that may emerge in the near future.
5. Maintain Assets: Once a homeowner has made the down payment, signed the papers, and moved in, the house will begin to feel more like a home. The hard part may feel like it is over, but it is important for homeowners to maintain their home and finances in order to remain comfortable. Homeowners should continue saving money, as unexpected repairs such as roofs and water heaters are notorious for needing fixes without warning. By saving money for emergency funds, homeowners will not be caught off guard and left with a financial crisis. In addition, regular maintenance to the home will keep the home in good condition while decreasing future repair costs. A house that is kept in tip-top shape will be ideal to sell in the future, and financial stability will allow homeowners to expand or search for a larger home, should they desire one.
Buying a new home is always challenging, and buying one’s first home is an even bigger challenge. However, with the right professional and the correct knowledge of the market, paired with financial stability and a plan for the future, first time homebuyers should have no problem settling down into their first home!