Tips, Tricks, and Common Mistakes for First Time Home Buyers
Buying your first home is an important decision. It is also a decision that comes with a lot of important, and sometimes foreign, concepts to understand. When buying a home for the first time, Zillow reports that nearly half of the people looking wanted a home that had never been lived in. Buying a new house can be more expensive, but there are also a lot of perks.
Knowing a good real estate company can help first time home buyers understand the pros and cons of buying new and understand important real estate factors that go into pricing a home. Here are some of our favorite tips and checklist items for first time home buyers:
Is it REALLY time to Buy? Is it really the right time for you to buy a home? There are many advantages of purchasing a home. Building home equity, the freedom to renovate, and having a solid place to call home are just a few. However, buying a home isn’t right for everyone. There are a number of things you should consider before purchasing a home. For example, many home mortgages span over 20-30 years. Are you ready for that kind of financial responsibility and commitment? If so, check this box with confidence and begin shopping for a home. This is an exciting time!
Pay Off Other Debts: A home mortgage will typically cost you around 30% of your monthly income. Having a significant amount of other debt (credit card, car loans, etc.) can hamper your confidence for being able to afford a new home. Be sure to pay off as much debt as possible before taking out a home loan, as home loans will be the most important bill for the next 20-30 years. Additionally, home loans have SIGNIFICANTLY better interest rates than credit cards or even car loans, because unlike cars, a home is an appreciating asset (meaning it gains value over time). First time home buyers should keep this in mind as they decide where to allocate money. Sometimes it is better to put a smaller down payment on a home in order to pay off a chunk of “bad” debt, such as credit card debt.
Save Up For a Down Payment: Speaking of down payments, saving up for a significant down payment can pay huge dividends in the future. Typically a down payment will be for 20% of the value of the home. This means if you are looking at a $200,000 home, you should have at least $20,000 cash for the down payment. The more you can put down the better, as it will end up saving you significant money on interest over the lifetime of the mortgage.
Save For Closing Costs: In addition to the down payment, there are other costs associated with buying a home. These are typically categorized as “closing costs.” To ensure everything goes smoothly, make sure you have enough money to cover all closing costs and move in costs. Closing costs are usually between 3-4% of the home value. Additionally, ensure you have money for the cost of moving in. Whether that is for moving trucks, new furniture, or small home repairs, there will be other costs associated with moving in. Being prepared is key.
Do Some Neighborhood Research: One of the things first time home buyers most often overlook is neighborhood appeal. When buying a home, you are likely going to be living there for several years, if not a couple of decades. Do some neighborhood research. Look at crime rate statistics. Drive around the neighborhood for visual queues that this is the right place for you and your family. Are there other neighborhood kids playing in the area? How close is the neighborhood to school, work, and grocery stores? These are all factors of your day to day life that can make or break the purchase of a new home.
Now that you have a little more information, time to start digging. Determine your price range and give us a call. We can help you find homes in the Los Gatos area that meet you and your families needs.