Home buying can be a stressful and expensive process. The house we live in now is the second home we’ve purchased. With each house, the process gets slightly easier but I definitely remember what it was like as a first time home buyer. Once you’ve identified that buying a home is right for you, here are ways to make the process easier on yourself and you’ll make out looking like a pro.
1. Get Organized
If you need a bank loan to buy your house, you’re going to need to provide some supporting documentation. Gather your income tax returns, pay stubs, bank statements, statements from investment accounts, etc. If it has anything to do with how much you make or how much savings you have, make sure to get the paper work to back it up. If you don’t have access to online banking, give yourself plenty of time to get paper copies of what you need.
Okay, you’ve been planning a dream vacation awhile and you’re ready to finalize your plans. You plan on putting the charges on your credit card so that you can get the points. If you’re planning to buy a house, you should postpone making big purchases until after you close on the house. The bank is checking your credit to make sure that they want to lend you money. If they see that you suddenly make a high dollar purchase, it’s going to raise a red flag.
Similarly, put a stop to any new credit applications until after you close on the house. The bank will be wary when they see that on top of borrowing money to buy a house, you’re also asking for new credit from other banks. They might worry that you won’t be able to timely pay back all your creditors.
3. Get Pre-Approved
Before you start looking at houses on Zillow and fall in love with the house of your dreams, get a bank pre-approval. This gives you an idea of what you can buy based on how much loan you can obtain. You’ll save yourself some heartache by not even looking at houses that are over your budget. That $400k house may be lovely but if you’re pre-approved for a $200k house, walk away and stop looking at it!
The process is super easy. These days, most banks allow you to complete the process online. You don’t even have to set foot in the bank! You’ll need to provide your social security number and the bank checks your credit and financial information.
4. Buy Less Than You Can Afford
Speaking of pre-approvals, just because you can borrow up to a certain amount of money does not mean you should. Hubby and I kept that in mind when we looked for a home. We reminded ourselves that every cent we borrow will have to be paid back with interest added so it was in our interest (ha, ha) to borrow as little as possible.
5. Buy for Your Present Needs, Not the Future
It’s fun to think about the future and have dreams of things to come. When it comes to home buying though, you should focus on the present. No one can predict the future. You might think that you’ll need a guest room because friends and family are going to come visit. You want a formal dining room because you think you’ll be hosting lots of dinner parties. You want a nice deck and patio to host summer barbecues. But…do you currently do any of those things? Buy a house that’s suited to your current lifestyle, not the one that’s in your head.
6. Plan for More Than the Mortgage
Buying a house is exciting. You’ve been scrimping and saving and are finally ready to take the plunge. Before you do though, double check your budget. When you buy a house, you don’t just pay the mortgage, interest, and insurance. You’re also responsible for maintenance and repairs which all cost money. Many people will want to furnish or renovate their homes and that requires positive cash flow as well. Keep all these costs in mind as you look for a house.
7. Try Out Your New Budget for a Couple Months
Now that you’ve developed a budget by taking into account all the miscellaneous expenses, try living on this budget for awhile. You’ll get a good sense of how realistic this budget is. This is also the perfect time to make changes to your budget before you commit to a house. If you have a hard time living on this budget, you need to trim expenses and/or buy a cheaper house.
8. Visit the Neighborhood During Different Days of the Week
A neighborhood’s ambiance can vary greatly depending on the day of the week and the time of day. Most people tour houses during traditional business hours. This is when kids are in school and adults are at work. That means the neighborhood will be peaceful and quiet.
When we looked at houses, we drove around the neighborhood in the evenings and on weekends. Some neighborhoods ended up with very different feels as we saw tons of cars parked on the street and sounds of music blasting from the backyard. Know what you’re willing to accept. We eliminated the busy neighborhoods because we don’t like the constant traffic.
9. Square Footage Doesn’t Matter as Much as You Think
Square footage is just a number, don’t place too much emphasis on it. Focus on concrete things like the number of bedrooms, bathrooms, and garages. A house with stairs counts the space underneath the stairs in the square footage even though that’s usually not livable space. It sounds very fancy to tell people that you live in a 6,000 square foot house. But, the square footage only tells you how much land your house is taking up. You should focus on the layout of the house and how much livable and usable space it actually has.
10. Find an Experienced Realtor
As a homebuyer, I think it’s important to have a realtor. They have access and knowledge that an average person does not have. Our realtor has been in the biz for decades and he had info on all the neighborhoods in town. There was a day after we finished looking at houses that he just drove us around and told stories about Vegas. He knew what we were looking and called us the day a new house came on the market. We toured the house that same day, put in an offer a couple of days later and it’s the house we live in now!
11. Location Matters
You’ve heard the adage, when it comes to real estate, it’s about location, location, location. Traditional things people consider include proximity to schools and shopping. It’s also smart to look at freeway access, new business constructions, and proximity to public transportation as they all have an impact on housing prices and your quality of life.
Also think about things you like to do in your free time. I’m a frequent user of the library, so it was a huge plus that our house is close to the local library. If you like to take walks and go to parks, then it would make sense to find a house that is near those amenities.
12. Talk to Neighbors
Neighbors, especially the nosy ones, are such good sources of information. They can tell you what the neighborhood is like. Are people friendly, do they watch out for each other, is there a neighborhood watch program and so on. They might even know something about the house that your realtor doesn’t.
13. Be Prepared to Have to Take Care of Everything
When we were renting, we had the luxury of calling the landlord when any little thing went wrong. We’ve had a leaky toilet fixed, a faulty washer replaced and a disposal fixed all at the landlord’s expense. Moral of the story – when the unexpected happens, be prepared to fix it yourself or pay to hire someone to fix it. This is your house, you’re paying for it so take good care of it. It’s easier to do routine maintenance than to have to pay big bucks when something develops into a major problem.
Buying a house can be scary but it doesn’t have to be. Do you have other tips to share with first time home buyers? If you’re currently looking to buy a house, what are some of things that are important to you?