Buying a home in the Carolinas for the first time can be a daunting experience. If you are a first time home buyer, remember that knowledge is power. Below, we present 5 key lessons to remember as you start shopping for your first house.
1. First Time Home Buyers Should Get Pre-Approved Before Shopping Around.
It may be tempting to start looking for and touring homes before actually contacting your local lender about a mortgage. But if you do end up finding a house that you truly can’t live without and you are not pre-approved for a mortgage, this will cause added stress and possible heartache. Markets can be fierce, and this added delay may cause the sale to go to the next offer.
To better your chances for success, first time home buyers should speak with lenders first, and set the maximum budget according to the pre-approved loan amount. At the same time, keep in mind that you shouldn’t max out your preapproved maximum either.
2. Don’t forget the Hidden Costs When Buying Your First Home.
First time home buyers should always have a maximum budget set before starting their home search. This overall amount should match up with your pre-approved amount, but it will also need to match up with your monthly earnings so that you can keep up with bills. As a good rule of thumb, try not to spend more than 25-30% of your monthly take-home salary on housing.
While you may have rented a home or apartment and paid a substantial monthly rent payment in the past, paying for housing costs when you own the home will be much different. You’ll be liable for your mortgage payment, and additionally, you’ll be responsible to pay for water, electricity, heating, garbage, recycling, and internet.
You’ll also be paying for maintenance and upkeep, which can, unfortunately, bring with it a number of unexpected expenses. The cost to repair a broken window, leaky faucet, clogged drain, and broken furnace will all be your responsibility.
Instead of instantly going with the newest and nicest home your pre-approved loan will cover, first time home buyers should factor these hidden costs into what expenses will need to be covered each month.
3. First Time Home Buyers Should Decide on Non-Negotiables
It’s best to know exactly what you’re looking for in your home from the very beginning. If you have a large family, one bathroom probably won’t cut it alone. If you love to cook, a tiny kitchen isn’t for you.
Of course, at the same time, you’ll need to be reasonable with your expectations — and take chances. Let your real estate agent know exactly what you’re looking for, but don’t be afraid to look at homes that don’t seem to fit the bill right away. You may be pleasantly surprised.
4. Don’t Sacrifice Location for Amenities.
As they say, location is everything. And it’s true! While you may love the extra half-bath on the first floor, the super-size garage, and the garbage disposal in the kitchen, these extra amenities are actually less valuable than a great location for your home.
Let’s say you have children. Not only will you want to find a location that’s safe and low in crime, but you’ll also want to be in a good school district. You’ll also want to be within close proximity to your place of employment, grocery stores, and safe and friendly neighbors. These are things your real estate agent should be able to help you with, so make sure to stipulate your location requirements from the get-go.
5. Understand Your Closing Costs.
Paying for the home itself will certainly be your biggest expense, but first time home buyers shouldn’t make the mistake of forgetting about closing costs. You’ll most likely need to pay for an appraiser and take care of the costs for the real-estate attorney. On average, closing costs will be about 2-5% of your home's purchase price. Finally, don’t forget about your own moving costs, which can quickly add up.
Be sure to do your research and check with your local lender inquiring about first time home buyers programs. Sometimes these programs offer no down payment, no private mortgage insurance and 100% financing helping offset some of the closing cost fees.
Buying a home as a first time home buyer can be a lengthy and challenging process. Your first experience may not be as smooth as you’d like it to be, but being prepared and taking these important pieces of advice into consideration will help immensely.
First time home buyers may not know where to start when it comes to buying their first home and applying for the best mortgage for their needs. Carolina Trust’s Mortgage Team is here to help guide you through each step of the process. If you have any questions relating to your unique financial situation, please contact us today.
