I’m a first time homebuyer, now what?
As a first-time homebuyer, there are things that are important to being a successful first-time homeowner. The most important thing that will make you successful in home ownership is understanding your market, understanding your mortgage, and knowing what you can and cannot handle.
Why is it important to understand your market? Understanding your market is important because it is important to understand your leverage. By leverage, I mean whether it is a buyer’s market or a seller’s market. Knowing the difference can mean money in your pocket or money on the table. Let’s check.
In a buyer’s market, the buyer should be aware that being in a buyer’s market does not make the buyer’s job any easier. It just gives the buyer more flexibility. Remember that in a buyer’s market, there may be multiple buyers for a property or only one buyer for a property. If there are no other buyers for a property by virtue of the time the property has been on the market, then the seller may receive a low offer. Sorry sellers. However, for sellers that doesn’t mean you have to give away your property, but it can mean you’ll have to settle for less than you expected to sell your home.
Another thing that makes the buyer’s market advantageous to the buyer and not the seller is that there are many homes to choose from that may meet the buyer’s criteria.
In a seller’s market, on the other hand, the seller has the upper hand. The seller can price your home significantly above market value and negotiate the purchase price to determine exactly the purchase price the seller desires. Sorry buyers. If the buyer really wants a home on a seller’s market, the buyer must succumb to the seller’s terms in order to get the home. In fact, in a seller’s market, the inventory of homes for sale that can meet the buyer’s criteria is less.
Why do you need to know what you want in your home? It is important in a word to eliminate or limit competition. If the buyer knows what they want in their new home earlier in the buying process, they can narrow down their search criteria and bid on the property of their choice instead of witnessing someone else buy the home. Plus, only you, the buyer, know exactly what features you want in your new home. You as a buyer know if your family needs three or four bedrooms, one or two baths, but more importantly you know what you can afford.
Why am I talking about “what you can afford”? Well, the reason is that your pre-approval letter has a different meaning than you think. Pre-approval is determined by your certain enough income-to-debt ratio; however, are you aware that all of your debt is not considered? What debt do you ask? The debt I am referring to is the electricity bill, the water bill, the telephone bill, the supermarket bill, the cable bill, the laundry bill, etc. And that can be more depending on where you live.
Now, the latest statements put the pre-approval letter in a new light, don’t they? Don’t be discouraged. Just do your homework. Shop where you already feel comfortable and be patient. Since today’s market is a buyer’s market, you’ll find a home in that comfortable range in no time. For example, if you can enjoy life and drive the car you want, go out to eat whenever you want for a rent of $800.00, and then look for a house where the mortgage payment with principal, interest, taxes, and insurance is of property is $800.00 or close to that amount. month.
Next, you need to determine which type of loan is an adjustable rate or a fixed rate. The difference is that the adjustable rate will make precisely that adjustment and many times it does not go down, but goes up. If your choice is the adjustable rate, find out what the maximum rate is and determine if you can afford the adjustment. Your mortgage broker and real estate agent can show the difference in payment.
The fixed rate is just that solution. The rate will remain the same for the life of the loan.
Lastly, know that what you can handle includes not only the mortgage payment, but the now new maintainer of the property. So I recommend doing a home inspection to make sure you haven’t bitten off more than you want to chew. The home inspection will tell you the condition of the home to include the condition of the roof, the condition of the plumbing, the condition of the electricity, etc. With a home inspection, you’ll get a detailed report of the home’s condition, and it can include any items that may need deferred maintenance. Deferred maintenance is important because those repairs may be done before or after the projected time range the inspector provides, so it’s important to be financially prepared. Let’s face it, as a first time homebuyer, all home repairs are now on you.
Don’t get me wrong, buying a home is a great and happy experience, but it can turn into a disaster if you’re not prepared, so I hope this helps.