Looking to buy your first home? Congratulations! This is most likely the largest purchase you’ve ever made. If you’re wise, you’ll look back on this time fondly for the rest of your life. If you aren’t, you could be heading into a disaster you’ll wish you could undo.
When buying first home, it’s crucial you’re aware of certain pitfalls waiting to turn your dream of home ownership into a nightmare. Here are some buying first home tips and ways to focus on saving for a mortgage deposit.
Strategies To Save For a Mortgage Deposit
Before we share our buying first home tips, it’s time to get saving for a mortgage deposit. This can seem like an impossible process, especially if you’re currently renting a property, but here are some effective strategies to get your money in order.
Get Rid of Direct Debits You Don’t Need
Many of us have numerous direct debits leaving our bank account each month, and they can soon add up. Take some time looking through your monthly outgoings and write a list of direct debits you can eliminate.
For example, is Spotify necessary or would streaming your music on YouTube be more cost-efficient? Perhaps you can ditch the gym and opt for home workouts or outdoor runs. Not only will limiting your direct debits help you to have more spare money, but it’ll increase the amount of money a bank will loan you for a mortgage.
Increase Your Income
This is easier said than done, but there are ways. Do you realistically earn enough money for the career you’re in or is it time to make a change? If you feel like you’re being underpaid, take strategies to take on more projects at work to demonstrate your work ethic.
Perhaps now is the best time to change your career. You shouldn’t prioritize your happiness for money, but there are many industries – such as marketing and media – that are thriving right now and have an array of opportunities.
Assess Your Renting Situation
Finally, one of the biggest factors that make saving for a mortgage deposit difficult is renting at the same time. There are plenty of ways to reduce your rent such as moving into a cheaper property or perhaps you could rent a room in your house.
Some first-time homeowners move in with family to reduce their outgoings. If you couldn’t hack moving back in with your parents, consider other family members or friends to save hundreds of dollars every month.
Effective Buying First Home Tips
1. What Can You Spend…Realistically?
For most of us, it can be tempting to eyeball that Zestimate and calculate that, Yep, I could swing that! The question is, would you also be able to buy groceries and keep the lights on?
According to Investopedia, “Generally speaking, most prospective homeowners can afford to mortgage a property that costs between 2 and 2.5 times their gross income. Under this formula, a person earning $100,000 per year can afford to mortgage between $200,000 and $250,000. But this calculation is only a general guideline.”
Another thing to consider before buying first home is whether or not your job is secure. You may be making six figures, but if there’s any likelihood that your income could fluctuate, you should keep your tastes as simple as you can simply afford in the long run.
2. What’s Essential?
Everybody has a dream home. Especially for young couples buying their first home, it can be easy to make lists of all the must-haves we’ve drooled over on HGTV.
In the real world, the fastest way to find a home that’s suited for you is to accept that not every “must-have” is essential. When you’re buying first home, you need to differentiate between your needs and your wants.
Will your home be warm, dry, and safe? Will you have working plumbing and code-compliant wiring? Try living without any one of these for a week, and you’ll find how low your need for inset lighting ranks on your list compared with a roof that doesn’t leak.
3. Questions Are Crucial
Nobody likes looking ignorant. When buying a first home, however, it’s crucial that you understand everybody’s been there – unless they haven’t. If they haven’t, it’s expected that they’ll have questions. The worst thing you can do is act like you know it all because you don’t.
You must be willing to ask questions about anything you don’t understand, or you’ll be driving blind into the biggest purchase of your life.
4. Real Estate Agents Aren’t a Waste
Many homebuyers have the mistaken impression that teaming up with a real estate agent is a waste of money. That’s such a mistake. Real estate agents have the ability to alert buyers to potential problems they’d have otherwise missed. They can often spot new listings early before other offers have started flying. They can even negotiate and bring down costs thousands of dollars.
Since the sellers pay for both agents’ commissions, there’s absolutely no reason for buyers to go it alone. When you’re buying your first home, you have double the need for the expertise of an agent who will fight for you.
5. Take Your Time
Unless you really do need to be in your new home by a certain date, be willing to move slowly. In the world of real estate, things usually don’t happen overnight. If you can start the process of buying first home knowing it takes time to hear back from loan officers, home inspectors, and sellers agents, you can save yourself a lot of anxiety and jagged fingernails.
6. Get a Home Inspection
Speaking of home inspectors, find a good one and hire that person. A good home inspection can be disappointing as it reveals that your dream castle is a royal dud, but it can save you thousands in the long run.
Many homes that appear perfect have structural issues that will affect every system in the house in some way. Others may have mold that can make you sick and won’t be covered by your insurance. Yet others can be infested by termites or other invisible pests, and unless you get a home inspection, you might not find out until you’ve moved in, and suddenly, it’s your problem.
7. Neighborhoods Matter
In this age of Zillow and iPhone house hunting, it can be easy to forget that a home is more than a house—it’s a yard, a neighborhood, and even a community.
No matter how perfectly a home matches your want list, would you still want it if it was next door to a penitentiary? If you plan to raise your family in this home, drive around and imagine your kids riding their bikes in the neighborhood. Would you feel comfortable, or would you want to run home and install bars on the windows? How close is it to your church, work, and family and friends?
Another thing to consider is whether the home comes with a homeowners association. HOAs can be powerful forces for keeping neighborhoods tidy and safe, but they can also be major headaches in some cases. Failure to abide by HOA rules can even result in foreclosure, so make sure to check on HOA regulations before you fall in love with a place.
8. Keep Upkeep in Mind
Another thing that’s easy for first time home buyers to forget is upkeep. Especially if you’ve never had to mow a lawn, fix frozen pipes, or clean gutters before, you might want to ask a friend to come look at the place you’re considering and point out potential upkeep factors. No one will think you’re ignorant. Instead, they’ll be impressed with your forward thinking and willingness to get good advice.
Buying your first home is a huge step. Move with caution. Don’t be afraid of appearing ignorant—so was every other person the first time they bought a home. You learn much more by accepting where you are than by trying to appear more knowledgeable than you are, and you’ll avoid serious pitfalls by asking questions.
Take your time, enjoy the journey, and happy hunting!