10 Tips for First-Time Home Buyers
In the summer of 2007, my wife and I purchased our first home. As a first-time home buyer, I knew we needed to spend a considerable amount of time researching our purchase. So that’s exactly what we did – we read as much as we could, educated ourselves on the local real estate market, and explored every aspect of the home buying process. But even then, we still made a few rookie mistakes.
Of course, it’s easy to see that now – after the fact. You know how the saying goes: “Hindsight is 20/20.” Although we are still happy with our purchase overall, there are definitely a few things I wish we would have done differently.
Valuable Lessons for First-Time Home Buyers
But you live and you learn. And in the end, that’s all anyone can do. With that said, I wanted to share some of our mistakes and other things we’ve learned since we bought our house, in case they might prove helpful to someone else going through the home buying process. Looking back on my own experience, here are some tips I’d recommend to any first-time home buyer:
Start saving right away
The earlier you start saving for that down payment, the easier it gets. We didn’t start worrying about it until it was too late, and we had to get a mortgage for more than 80% of our home’s value. If we had been on the ball even two years earlier, we wouldn’t have had to do that.
If you want to avoid paying private mortgage insurance, or PMI, in most cases you need to save up at least 20% of your future home’s value to use as a down payment. That’s easier said than done, but it becomes a much more realistic concept if you start saving right away.
Even if you aren’t ready to buy in the foreseeable future, you can put yourself in a better position by stashing $50 or $100 per month into a new home fund. The bottom line: The sooner you start, the better.
Don’t rush things
Because of the timing of my wife’s pregnancy, we felt rushed into our home purchase. With a baby on the way, we knew our apartment would soon be exploding at the seams. Although I’m happy with our home purchase, I wish we hadn’t rushed it so much.
There are lots of factors to consider when buying a home, and you can often benefit by searching in different areas and neighborhoods before you pull the trigger. I feel as though we settled in a way, and that’s one mistake I still regret.
Build your emergency fund
When you’re a first-time home buyer, it’s easy to be shocked by the many “extras” that appear in your monthly budget. Things that didn’t exist before – like larger utility bills, home repairs, and lawn maintenance – start adding up and making a huge difference in your bottom line.
If you want to be as prepared as possible, build your emergency fund for several months – or even years – before you commit to the home buying process. The money will be there when you need it that way, which will make the entire purchase a lot less stressful.