Home is not just the dwelling place but is the perfect shelter to get the comfort, peace and solace that we require. Naturally, we all desire to own a house and live happily. However, the procedure of choosing and buying your perfect dream home can get a little tricky especially if you are a first time home buyer. Lack of experience can make you commit errors which may ultimately put you at a loss. Therefore, if you have plans to buy a new home and is not confident enough about how to search and choose a perfect home, then this article is a must-read for you. Here I have discussed about the 13 essential tips for the first time home buyer. These tips and strategies will be handy throughout the process and help you in searching, planning, financing etc. Proper planning, smart budgeting and getting loan approval at the best possible rates is seriously important while buying your first home, and this post is going to help you through the process.
Selecting and buying a perfect home is a big commitment and responsibility but with little guidance, even the first time buyer can get it right. The most important thing is to get your priorities and criteria right. The concept of a perfect home varies from person-to-person and so you must always choose your home based on what’s important for you. However, there are some common basic parameters as well which you must take into consideration. In this post, I will give you a detailed overview and talk about the most essential strategies that will make the whole process of buying your first home smooth and easy.
So, without wasting much time, let’s get started with the discussion.
Essential strategies and tips for the first time home buyer
Every new experience is exciting as well as full of nervousness. Similarly, owning a new home is hell lot adventurous with lots of up and down in between. Due to lack of experience, you may get confused and end up wasting money with little returns but if you follow some of the essential strategies and rules of home buying, then you can overpower everything and emerge successful.
Here are my top 13 tips for the first time homebuyer that will make you win against all odds.
Take time to research minutely
If you are a first time homebuyer, then you have no knowledge or experience and so it is seriously important to do proper research before you start the procedure. The research must be done minutely and you must make sure that you have adequate time in hand and not have to rush into conclusions. Proper background research is important in every aspect and step of home buying as it gives you a clear picture of the whole thing. Hence, start the process of gathering information much early and take decisions wisely.
Fix your budget in advance
Fixing a proper budget is mandatory before buying anything and home buying is no exception. It forms an integral part of home buying strategy for all mainly for those who are young and are slowly trying to become financially stable or in other words the first time homebuyers.
You must look at your savings first and plan to buy a new home only when you have an emergency savings account. Also, make sure that your budget includes the expenses that come after buying a home, for example interior designing and furnishing, arranging for the basic needs and other important necessities like moving and relocation costs and so on. So, do not put yourselves into financial stress. Budget everything to the extent you can imagine for it will help your home buying much smoother.
Do not overspent
It is always important to stay in your budget and not overspent. Having a sound financial status will make you seem reliable to the lenders and help you get the best loan deals from them. On the other hand, if you are into too much debt and have unstable financial condition, it will act as a hindrance in getting a good loan. Also, avoid opening new credit accounts if you have plans to take a mortgage soon.
Start saving for the down payment early
It is important to start saving for your down payment early. Mainly it is around 20% down but for first time homebuyers it is often as less as 3%. However, you must remember that lower down payment can lead to high cost and private mortgage insurance. So, rather than hoping for low down payment, you can actually start saving early.
To save a down payment, you may set aside the work bonuses; tax refunds etc and take the help of a down payment calculator to track your progress. You can also consult local and state assistance programs and take their opinions. Moreover, you must research thoroughly for the mortgage options and compare the rates from beforehand. This will give you a brief overview regarding the whole process.
Take pre approval of the home loan
It is important to get pre approved for your home loan as it means that your lender has already checked your financial status and have an idea how much you can afford and how much he can lend you. This saves a lot of time and makes your house hunting process faster as you do not have to run here and there looking for houses you cannot afford. It also gives you the chance to shop with the best deals and avail the best interest rates.
While getting pre-approval, don’t limit yourself to your personal banker, because the other banks may offer you better rates of interest and loan offer. Usually PSU banks offer better rates of interest and hence you should look at all the options available to you.
Keep a backup lender
At times, qualifying for a loan does not guarantee that you will get funded. This is because the investor markets, underwriting guidelines, or lender risk analysis may change and you may not get the money at the end. Therefore, it is important to keep a backup lender, which can become your alternate way to continue the process.
Another advantage of having a backup lender on your side is, you actually get the liberty to choose the lender who offers you the better rates of interest and overall loan package. Different banks may offer different rate of interest. At times they run festive offers and you should take advantage of such offers.
Choose a good real estate agent
As soon as you are sorted with the loan process, start searching for a good real estate agent. This person whom you will choose can help you in getting the best deal. So, find someone who is very skilled, knowledgeable as well as someone with whom you can get along easily.
It is highly advisable to hire a person who has a strong team and can give you good suggestions. Take his help in finding the proper reason as to why your seller wants to sell his home. The reason of selling it is important and if you find something dicey or something that does not seem valid, then please do much more survey before selecting the home.
Be a smart bidder
When you are conversing and bargaining with your seller, just try to be a smart bidder. The bidding must be based on how much you can afford and how much you honestly believe the property is worth. For this, you need to keep a good track of the market at that time and make your opening bid reasonable and fair that will not offend the seller completely.
You can also take some idea regarding how much the homes in that locality cost per square foot. Try to have a fair knowledge on the property taxes as well as it will help you to make a great deal with your seller.
Check the cost of living
The better the location, the better will be living facilities and better facilities, makes your cost of living high. If you are financially stable, you can go for any location you want depending on your preferences but if you are financially not that strong, there is no need of buying a home in a posh location. Otherwise, this act of yours will backfire and will make your expenditure much more than your earnings and unnecessarily put you in financial trouble.
Consider the location of your home
When you are planning to relocate and shift to a new home, you will obviously want it to be better that your previous one. So, if you are financially stable and can afford a good cost of living, please go for the location that has good added facilities. Transportation system and market is important.
If the location is close to your workplace, then there is added benefit. Moreover, if you have children, you may also consider his/her school distance from that home. So, what I mean is try to go for a location that suits most of your purposes.
Keep the future in mind
While jotting down your preferences and criteria of buying a new home; do keep your future days in mind. This is because the new home may seem convenient and meet up to your present needs but if you plan to stay there permanently, you have to plan for tomorrow else you will face problems in near future.
For example, if you have plans of starting a family soon and the home that you buy is too tiny, there is bound to be space problem in future. So in that case, you can buy a moderate size home as per your budget now and keep the prospect of expanding it in future.
On the other hand, if you have a very small or a nuclear family with hardly 2-3 members, then buying a very big house is just unnecessary. Not just that there is excess space with none to stay but also it can cause difficulty in maintaining it in future. Therefore, always buy keeping your upcoming life in mind.
The environment must match your lifestyle
As I have already told, people have their own likes and dislikes. Many prefer places that have good transport facilities and are urban while others love places that are more into greenery, scenic beauty and peaceful. So consider the ambiance of the location and the environment depending on your needs.
In other words, buy a home situated in the area that matches and compliments your lifestyle. This will help you easily adapt to the change without much difficulties.
Friendly neighborhood is important
Not just the location or the space but also the neighborhood matters. I am sure that you will never want to live among a group of rowdy people who can make your life a living hell. So please do proper survey of your neighborhood. Visit the place at different timings and different days and carefully watch the surroundings. Having good neighbors is a blessing but the opposite is no better than a nightmare. So make sure you are confident about the locality before you take the decision.
It is a known fact that you have to take a lot of effort to find a perfect home for yourself especially if you are a first time home buyer with no previous experience or idea. However, if you can execute the whole procedure strategically then you can actually come in a win-win situation and get successful. For that, all you need is a bit research, a bit of consulting with the experts, a decent effort on your part and lots of patience and determination.
The most important thing is considering your budget limit, saving a decent amount, completing the loan procedure and then consulting a good real estate agent to find the perfect home. Jot down your basic priorities and discuss it with your buying agent to find the right home for you. Do not get aggressive during the whole procedure and be gentle, friendly yet smart while dealing with people. Rude behavior may put you in loss, so stay calm and do things systematically.
I have discussed all the necessary tips that will help you throughout the process of buying your first home. I have also considered all the practical issues before detailing the facts and I hope you will benefit from it. Once you have bought your home, you may need interior designing services and here’s the ultimate guide for interior designing. You may also check this post to learn about how to hire interior designers in India.
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