Whether you’re buying your very first home or buying your fifteenth home, there are things that need to be considered in the process.  First time home buyers, especially, may not think about some of these things and may end up in trouble down the road, with higher monthly payments, or unexpected expenses.  Check out these eight things first time home buyers need to know to make the home buying process as smooth as possible {and then email me at randi@repeatre.com so I can email you a copy of my first time home buyer’s guide}.

When buying a home, knowledge is powerful.  Do your research, talk to a realtor that understands the market you’re interested in, and find someone that can walk you through each step of the home buying process.

What a First Time Home Buyer Needs to Know

Lenders.

When first considering buying a home, talking to a loan officer is one of the first steps to take.

A loan officer can tell you how much house you can afford, what the best type of loan is for you, and what your monthly payment might look like.

Lenders can also tell you about first time home buyer options and programs that are available in your state.

Pre-approval, especially in a fast-moving market, is key before you ever start looking at homes.  This is generally a very simple process that can happen in a twenty-four hour period.  If you’re not sure who to contact to help with pre-approval, I’d love to refer you to someone that can help.

Down payment.

A bigger down payment will obviously give you a smaller mortgage and lower monthly payments.

If you have a down payment of 20% or more on a conventional loan, you can also avoid paying mortgage insurance.

A loan officer can advise you best on the finances related to the home buying process.

Credit reports and credit scores.

It’s always a good idea to check your credit reports for errors.  You can get a free credit report yearly from each of the three main credit reporting companies {Equifax, Experian, and TransUnion} and I recommend doing that.  Errors happen and staying on top of your credit reports means you won’t be faced with any surprises when you enter the home buying process.

Once you begin the process of buying a home, don’t touch your credit until the deal has closed!  Don’t apply for a new credit card, don’t buy big items on credit, and don’t finance a new car before your mortgage closes.  Lenders look at your credit and your debt-to-income ratio and you don’t want to make any big moves that will affect the ability to get a loan.

Location, location, location.

While a certain area might seem currently trendy and fun {and that does count for something}, consider resale value and neighborhood upkeep.  Buying a home is an investment and you want it to be a good one.

Look at how well the neighborhood, yards, and public areas are cared for and do some research to see how neighborhood home prices have fared over the years.

Homeowner’s Association or HOA.

Depending where you live, the neighborhood may have a mandatory homeowner’s association.  This is an organization that makes and enforces rules for the properties and residents.  An HOA helps ensure that a neighborhood is maintained, that grass is mowed, and that houses don’t fall into a state of disrepair, affecting property values throughout the subdivision.

HOA fees are typically collected quarterly or yearly and range greatly, depending where you live.  MLS listings will typically provide HOA information and I recommend looking at that before you view a home.  A high HOA fee can be a deal breaker, depending on your budget.

One other thing to note: most HOA’s will limit house colors, roof colors, fence styles, and other exterior changes so if you’re buying a house and hoping to flip it or update it, find out what restrictions are in place first.

Property Improvement District {PID} tax.

More and more areas now have a PID tax, which allows a city or county to charge a tax against properties.  That tax allows for improvements within the area but, if it’s not expected, it can stretch a budget.

Property taxes.

Property taxes can be rolled into a mortgage but when property taxes go up, so can your monthly payment.  When the value of a neighborhood goes up, so do property taxes.

Property tax increases can be appealed and when a significant jump is seen, I recommend appealing.  If you’ve seen a hike in your property taxes, send me an email {randi@repeatre.com} and I can create a comparative market analysis that you can submit in an appeal to the county appraisal district.

Maintenance and upkeep.

Maintenance and upkeep is always something to consider when buying a home and is a big consideration when buying an older home rather than a newer home.

Depleting your savings account to buy a home might not be your best bet unless you have the means to be able to easily build it back up again.  Appliances break, roofs need replacing, fences need to be fixed, and general maintenance can be expensive, especially if you’re not able to DIY some of the jobs.

Buying a home for the first time is such an exciting time but one that you need to go into with eyes wide open.  If you’re ready to take the leap, or you’re considering getting into home ownership, I’d love to talk to you about the next steps.