The poet Maya Angelou described the desire for homes in this way: “The ache for home lives in all of us, the safe place where we can go as we are and not be questioned.” If you are about to be a first-time home buyer, Angelou’s words likely move you.
But while your home will eventually be your oasis in the world, you must walk through the process of buying a home as the most practical version of yourself. That’s why we made a list of 5 things first-time home buyers need to know.
1. Set a realistic goal for the mortgage payment on your first home
A monthly mortgage payment is a serious financial commitment, and as an aspiring first-time homeowner, you must know how much money you can afford to pay for your new house each month, long before you start checking out houses.
As a starting point, most financial advisors will tell you that your mortgage payment should not be more than 30% of your income (before taxes). Don’t forget to incorporate mortgage insurance (homeowners’ insurance) into your budget as well!
But you also need to know how you are currently spending your money each month. Write down all of your expenses, including entertainment, clothing, and so on, and calculate how much money you have left for a mortgage payment.
2. A pre-approved mortgage is a must
When you have decided that you are going to buy a new home, you will want to get moving to get the process started as quickly as possible.
Obtaining a pre-approved mortgage is a must as it lets sellers know that a financial institution is backing up any offer you make. Also, choosing a home before you know how much you can pay for a home is, well, a big mistake. This is one of the most important things first-time home buyers need to know.
Remember, just because a bank or financial institution is willing to lend you a lot of money does not mean that you should accept it: Stick to the reasonable amount that you have calculated as a mortgage payment.
3. Your savings account will be more important now
Financial experts recommend that new homeowners should have approximately three to six months of savings in an account that is earmarked for unexpected costs. Why?
There is no landlord to call when something goes wrong in your new home. If your furnace breaks down, it could cost anywhere from hundreds to thousands of dollars to repair it. If your roof doesn’t make it through an intense windstorm without several shingles flying away, it too could cost at least several hundred dollars to repair.
Home maintenance is necessary, and occasionally costly enough to surprise you. You can shore up your home savings with shared equity agreements if you don’t mind giving up some equity when you sell your home, too.
4. Renovations and your first home
You may fall in love with a happening neighborhood and its alluring houses and decide that a fixer-upper is just the thing for you. You know that feeling you get when it’s the only house you can afford in said cool neighborhood. Resisting this urge is one of those costly things first-time home buyers need to know, and for good reason. It’s a big commitment.
Unless you are a first-time homeowner and a bona fide carpenter with serious skills, renovations are going to take a lot longer than you think they will, be more expensive than you initially calculate, and disrupt your life in ways that you have not yet conceived of.
5. Real estate blogs are a thing
Social media is for buying a home too. Take the popular blog Realty Dream, where first-time home buyers dish about home maintenance issues that have come up in their new home, insurance terms they wish they’d known, moving mistakes that they have made, and brilliant decisions that saved them money. Google “Real estate + Blog” and start reading!
Those are the 5 most important things first-time home buyers need to know. Not sure how much your new home will cost to insure? Get an accurate online quote in 3 minutes.