If you were born in the later years of the Millennial generation, you may be thinking about becoming first-time homebuyers. And, if you’re like many Millennials, you graduated from college, got a high-paying job and saved your money. You don’t want to buy a starter home – you want a home with lots of room for expanding your family, high-end finishes and all the comforts you got used to in your parent’s home.
The difference between you and other first-time homebuyers is that you’re going to be making a significant investment. These tips can help you protect that investment and prepare for your future.
Know the difference between what you can afford and what you’re comfortable paying.
A common mistake first-time homebuyers make is that they aren’t realistic about what they can afford. Or, more importantly, the percent of their budget they want to spend on a mortgage and related expenses.
You may be get approved by a bank for a $400,000 loan, but when you do the math, you discover that loan won’t leave you enough discretionary dollars to do the other things you want to do. Start your home search by deciding what percent of your take-home pay you want to spend on your home each month, and look for homes in the price range that will make you comfortable.
Identify a realistic view of the cost of home ownership.
When you consider your monthly obligation, make sure to account for utilities, maintenance and HOA fees. Don’t want to cut the lawn yourself? Add the cost of a monthly service to your mortgage payment. Once you become a homeowner, you’ll experience all the little maintenance issues that come up. Be sure you plan ahead to cover those expenses without ruining your financial plan.
To get a feel for the type of home that fits within your “want to spend” dollar limit, use the internet to look at Davie FL homes for sale or those in the surrounding areas before you start looking in person. You can create a personal Davie area MLS home search account that will let you save searches in various price brackets. Keep in mind that you need to look at the information coming directly from the official up-to-date source, the MLS. Zillow Zestimates are flashy, but historically they’ve proved to be extremely inaccurate.
Those saved searches will make it much less time consuming when you want to look at set of search results. In addition, you can save homes in your account’s favorites to keep track of homes you find attractive. You’ll even get email updates when homes that meet your criteria first hit the market.
With this information, you can make informed decisions. If getting your dream home will be slightly higher than the budget you set, you can consider if you want to increase your budget considering the things you may need to give up or defer if you do.
Reinforce your negotiating position by getting pre-approved.
Getting pre-approved by a reputable lender is an absolute requirement. Do it before you start looking at homes. There are several benefits:
- You’ll find out if there’s a match between the amount the lender will approve and the loan amount you want. If they don’t, you can readjust your approach. If credit is a problem, find out what you need to do to improve it.
- You’ll be able to move quickly when you find a home you want to purchase.
- You’ll be able to negotiate from a position of strength. Sellers want to accept an offer from someone who can prove they are capable of closing the deal. This is especially important if you find yourself in a bidding war. Your offer will carry more weight if you have a pre-approval in hand.
Choose your real estate agent carefully.
There’s a myth in real estate that says all real estate agents are the same, but it’s only a myth. Especially when you’re purchasing your first home, you’ll need to depend on insight from professionals since you have limited information about the home buying process.
Choose a real estate agent as carefully as you choose your first home. Relatives or family friends may not have the skills you need to guide you through this process. Choose an agent you can trust, and ask the tough questions that will ensure your agent meets your needs. You need an agent who has worked with first-time homebuyers before. The agent should know the local neighborhoods and be able to help you choose a home and neighborhood that fit your lifestyle.
Buying your first home should be an exciting and fulfilling experience. If you put careful thought into the financial aspects of purchasing a home and work with an agent who can get you the information you need to make informed decisions, you’ll end up a very happy first-time home buyer.
The real estate experts on The Teri Arbogast Team have extensive experience in working with first-time home buyers. If you want to explore establishing a relationship with a top real estate agent, call us at 954-242-8030 or send an email for more information.