Owning a property entails a big responsibility, which is why first-time a homebuyer (or homebuyers) need to be prepared. Apart from extensive research and budgeting, you also need to consider various other factors that can impact the comfort and convenience of your home. This article tackles some of the most important details that first-time homeowners should know early on.
Before Becoming Homebuyers
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Figure out your Priorities
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Before you commit to buying a home, the first thing that any potential homebuyer needs to do is to figure out your priorities. In this case, you need to decide which factors are non-negotiable for you such as the location where you intend to buy your property, or the amount that you are willing to pay. For instance, you may find a great property deal if you give up the location that you prefer or the other way around, you may find the best property in the location that you want as long as you are willing to pay for it.
The key is in not committing before you are ready to do so. Keep in mind that owning a home is a huge commitment and it can also cost you more than you can imagine. Thus, you need to make sure that you know what you are getting into and that you are prepared for it. In this case, it will help if you perform extensive research about buying properties, as well as how to maintain them.
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Organize your Finances
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As soon as you have figured out your priorities, the next thing that you need to do as a potential homebuyer is to organize your finances. In this case, it will help if you first settle all of your debts and make an effort to build an emergency fund. As a homeowner, you will be responsible for all the maintenance and upkeep costs of your home, which is why you should be prepared for it because it may prove to be more expensive than renting.
You also need to determine how much you can afford before you get emotionally attached to a gorgeous house. When you research online sources, you are most likely to find mortgage calculators that you can use for free to estimate how much you need to budget for monthly payments. You will be able to calculate mortgage payments using this tool which is primarily intended for that purpose. These calculators will already factor in the interest rate, loan term, property taxes, as well as insurances that will most likely affect your mortgage payment.
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Save for a Significant Down Payment
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As much as possible, the potential homebuyer should make an effort to save for a down payment that will comprise 20% of the purchase value of your home. In this way, you won’t have to pay for private mortgage insurance or PMI, which can save you a hefty sum on your monthly mortgage payment. If you can go beyond the 20% purchase value, then that is even better because the mortgage payments that you have to pay later on will also be lower. Effectively, the interest rate of your loan will also be lower with a greater down payment.
Try to steer clear from first-time homebuyers programs that offer a low down payment or no down payment options. The reason behind this is that these programs have various hidden fees that may rob you of your hard-earned money in the long run. For instance, you may be eligible for a federal housing administration (FHA) loan, paying as little as a 3.5% interest rate. However, you need to pay a mortgage insurance premium that is similar to PMI for the life of the loan, which equates to thousands of dollars that won’t be geared towards paying your mortgage.
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Get Preapproved for a Loan
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If you are already confident that you have enough cash to make a down payment and that you will be able to handle the mortgage payments thereafter, then the next thing that you need to do is to get preapproved for a loan. Ideally, the homeowner should do this before you start searching for a property to buy. The reason is that with a preapproved loan, sellers will treat you as a serious buyer, allowing you to get ahead in the competitive real estate market.
From there, you can already begin finding a home within your budget range. In this case, you can seek the help of real estate agents, or you can initially search online. Either way, you will already have a good idea of which properties are for sale. You can even leverage multiple listing services (MLS) to find the properties suitable to your taste and preferences in the areas where you are interested to buy.
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Homebuyers should research Suitable Neighborhoods
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During your search for a property, you should also take the time to consider the neighborhood. If you have kids, you may want to consider whether there is a school within the vicinity or if public transportation is readily accessible. As a homebuyer, you should also ask about the crime rates in the neighborhood or get to know the people living in the area.
Statistics show that several home buyers are willing to compromise the condition of the property, as well as its size over the type of neighborhood where the property is located. Make sure that you end up with a neighborhood that you and your family are comfortable living in, allowing you to feel safe and secure. To accomplish this feat, you can even attend open houses but remember to think long-term. You can also dig deeper during a routine home inspection later on, even if it means shelling out a few more bucks.
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Homebuyers should meticulously Review HOA Documents
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If you are buying a property in a community with a homeowners association (HOA), take the time to read through their policies, conditions, and restrictions. You should look into anything that may affect your home, in the long run, to avoid any surprises down the road. As much as possible, review HOA documents early on rather than later in the buying process. In this way, you will be able to walk away sooner if there are any items in the documents that will prevent you from closing the deal.
In case you have any boundary questions because you are planning to make changes to your property after its acquisition, make sure to perform a land survey. In this way, you will be sure of your property lines, eliminating any chances of disputes around land ownership between you and your neighbors. It is also a good idea to check any building plans for the neighborhood because any development projects, later on, may impact the value of your property.
During the First Year as a homebuyer
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Homebuyers should Create an Emergency Fund
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When you have successfully acquired property, the first thing that a homebuyer needs to do is to create an emergency fund intended for house expenses such as repairs and maintenance. Fortunately, you can build this fund gradually but it will be better if you already have a little, to begin with. Thus, make sure that your home purchase won’t leave your bank account empty. In this way, even if an emergency occurs during your first few months of ownership, then you will have the funds to have your expenses covered.
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Homebuyers should Make a Priority List
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Another thing that you need to do during your first year as a homeowner is to make a list of priorities that you need to accomplish in your home. When you move, there is a great chance that your mind will be racing with various things in your to-do checklist. To keep you from being overwhelmed with all these tasks, it is best to write them down and give them a certain level of priority.
The first items on any homebuyer's priority list, such as cleaning and unpacking, should be accomplished within the week. The second priority tasks usually related to organization and maintenance should be done within the month. Non-essentials and project improvements can fall on the third priority on your list. In this way, you will be able to tick off one of the items in your list one by one.
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Homebuyers Should Keep A Journal
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It is also a good idea for a homebuyer to keep a journal where your insurance papers, repair receipts, as well as all the other paperwork related to your home are properly organized. This will make it easy for you to track and find the documents that you need when you need them. When you decide to put up your home for sale, later on, this compilation of your property documents will also make the process easier and more seamless.
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Find the Electrical Panel and Main Water Shutoff Valve
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Make sure that you find your home’s electrical panel even before you settle in. In this way, you will be able to shut off the power as needed. More often than not, the main circuit breaker can be found in a utility room, in your basement, or the garage. Usually, at the top of the panel, you will be able to find the main breaker for the entire house.
You also need to find your home’s main water shutoff valve to ensure that you will be able to turn it off when necessary. More often than not, this is located directly before your water meter but where your meter is placed generally depends on the climate in your area. For instance, in cold climates, the meter and main shutoff valves are usually found in the basement or other warm areas because this prevents them from freezing. Otherwise, you may find your meter and the shutoff valve attached to an exterior wall.
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Homebuyers should Dedicate Time for Maintenance
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During the first year in your home, you need to dedicate ample time to maintenance. For instance, make sure that you test your fire alarms, replacing batteries, and adding more alarms as necessary. You should also take the time to clean your refrigerator condenser coils because not only will this help you conserve energy, but it will also lengthen the lifespan of your fridge.
Another thing that you need to take time to clean is the lint screen of your dryer because a dirty lint screen will result in 30% more use of electricity. If you can, you should also replace the furnace filter of your heating and cooling system, as well as clean your air conditioner condensers and evaporators. Make sure not to miss checking your water heater too, draining it as necessary, not only to save on your utility bills but to maximize its efficiency and conserve water.
Alongside this, it would be a good idea for a homebuyer to check the crawlspaces and the attic of your home in case there is one. In here, what you want to check is the presence of leaks, bugs, or mold, as well as any other issues that may need to be addressed immediately. You should also inspect your garage door springs, lubing them at least annually to extend their lifespan.
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Try to Get to Know your Home
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Before you plan on making any major changes in your home, take the time to get to know it. As much as possible, try to live in it for about 12 to 18 months before you consider making any major renovations such as knocking down any walls or adding more space. Keep in mind that what you initially planned to change may still change after you have lived in your house for quite a while. It will also make sense to get a home warranty because this may just save you a hefty sum.
There are various things that you need to be aware of as a first-time homebuyers but there is also important information that will prove to be more beneficial if known sooner. Before you acquire a property, take the time to research and get to know your options. As soon as you land your dream home, try to get to know every little detail of it. While it can be quite challenging to maintain a home, rest assured that all your effort will be worth it in the end.
