Ready to Buy a House? Here’s what You Need to Know
Purchasing a house can be a dubious procedure. For first-time homebuyers, it might appear as though the most complicated part of a home purchase is finding the ideal property, but that’s really only half the equation. There’s a lot to manage on the back-end, including financing, timing, and big decisions about how and where you want to spend the next years of your life. It can get stressful and overwhelming, which is why it helps to go into the homebuying process with as clear of an idea as possible about what lies ahead and how to tackle it. Whether you’ve already started your home search or are just embarking on one, here are the things that you need to know.
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Know your budget…
First and foremost: know how much you have to work with. The amount you should spend on a home is a complicated number comprised of how much you’ve got in the bank, how much you’re comfortable spending, and how much you want to take out as a loan. There are other considerations, too, like how much money you need leftover to furnish your home once it’s purchased and whether you’ll need money for repairs or renovations. Simply guessing at your budget isn’t a good strategy, so get the help of an expert early on. It can be a financial advisor, mortgage broker, or someone else who can give you a budget based on your current financial status and your future goals.
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…and stick to it
Money can easily lose meaning when you’re faced with spending so much of it. After all, what’s another ten thousand dollars on a thirty-year mortgage when you’re already borrowing hundreds of thousands? Mortgage lenders will often approve you for way more than you should advisably spend, so it’s important to not just be apprised of your actual budget but to treat it like a ceiling that you can’t go over. Purchasing a home isn’t a decision that only affects you now. So while it will likely be incredibly tempting to spend a little more and get a little more, it’s important to think the big picture. That extra $10,000 on a $100,000 loan will mean hundreds of dollars extra year in mortgage payments.
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Don’t forget about closing costs
Speaking of extra money, don’t neglect to factor in closing costs when you’re coming up with your spending limit. You may think you’ll get off easy since the seller usually covers agent commission fees, but there are still a lot of other costs associated with being a buyer: title fees, mortgage insurance, homeowners insurance, underwriting fees, taxes, attorney fees, etc. Together, they can—and often do—run up to ten or twenty thousand dollars. And that’s on top of your down payment. First-time homebuyers aren’t going to have capital from the sale of a previous property, so that’s money you’re going to have to save for and factor in when you’re deciding how much to put down.
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Don’t go with the first mortgage you find
It pays to shop around when it comes to finding the right mortgage. Rates and fees can differ from lender to lender, so if you go with the first one you come across you may be taking on unnecessary additional costs. If you don’t know where to start you can work with a mortgage broker, though keep in mind that you’ll be paying them about 1% to 2% of your total loan rate in fees on closing day.
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Put a hold on any activity that might negatively affect your credit
Your credit plays a big role in both the terms and interest rates of your mortgage. Once you know where you’re at with your credit score, hold off on doing anything that could negatively affect it, such as opening a new credit card, taking out a different loan, or refinancing any existing loans. You can take actions that could work to improve your score—think paying down loans—but for the most part, focus on stability. This is especially true for the period between mortgage approval and closing.
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Find a realtor you really like
First-time homebuyers often start searching on their own. There’s nothing wrong with browsing properties without a realtor, but you should have an expert on your side when you find a property you’re interested in. An experienced agent is a seasoned pro at all of the things that can be foreign to first-timers in the market, including trends and comps, negotiations, and all the real-estate-specific language that can be super confusing if you’ve never come across it before . In addition to all of that, a realtor will help you schedule showings and help connect you with a reputable attorney and home inspector when you find your ideal home. And just as important as working with a realtor is making sure to work with a realtor you like. Do your research, read reviews, and ask for referrals to find someone who you get along with and who is ready to do their best for you.
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Know your dealbreakers…
You probably have a pretty good idea about what you’re looking for in a home, but what about those things that you know you don’t want? While it’s important to keep an open mind, every homebuyer—first-time homebuyers among them—probably has a general idea of things they can’t overlook, even for the right price. Maybe you know you’re not ready to take on a fixer-upper, or that you’re not willing to add another hour on to your commute. Acknowledging your no-gos is helpful for narrowing down your search, and will help mitigate the chances of future buyer’s regret.
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… but look past bad decorating
There’s a very high chance that most of the potential properties you see are going to have something about them you would change. And while orange kitchens, shag carpeting, and dated window treatments may be tough on the eyes, they can all be changed pretty easily. Don’t let bad decorating turn you off of an otherwise charming home… a house with good bones is worth putting in a little bit of time and effort to make it your own.
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Get comfortable with negotiations
The back and forth negotiations inherent in buying a home can take first-time homebuyers way out of their comfort zone. It may feel weird to ask the seller to bring down their asking price or to make certain repairs—especially if you’re framing it as an ultimatum, wherein you’ll otherwise walk away from the property—but it’s part and parcel of the homebuying process. Compromises are expected to be made on both sides, and when it comes to getting what you want it never hurts to ask. Fortunately, your realtor will be the one actually doing all of the direct communication during negotiations—you’ll almost certainly never meet or speak to the seller yourself.
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Think of the future
Unlike renting an apartment, where you’ll likely be out in a year or two, you’re probably going to be in your first home for half a decade or more. Because of this, you need to factor in not just your current needs but your future needs when you’re choosing the right house. Want to start a family? Make sure you have an extra bedroom or two. Planning to adopt a dog? You’re going to want a yard. Your current needs are important too, but envision how you intend to grow into your home, and give those considerations some weight when you’re making a final decision.
Here’s a secret that first-time homebuyers should hear but often don’t: there’s no such thing as a perfect house. Even if you think you’ve found it you’re going to find yourself getting annoyed with unexpectedly noisy pipes or summer ant problems or rude neighbors. It’s all part of the general joys of homeownership. Go for the place that makes you feel happy when you walk in the door and that doesn’t overstrain your finances or come with a list of problems that you have to force yourself to overlook. While the perfect home may not exist, your perfect home is out there—you’ve just got to find it.
Ready to buy a house?
If you’re thinking of buying a house in westport connecticut area and need some help, we’re here for you.
Ruspini Realty is committed to assisting a diverse group of people in a wide range of house values from the starter home to the prestigious property. We list, market and sell homes fast for the benefit of both buyers and sellers alike.