10 Tips for First-Time Homebuyers
Are you a renter with a secure source of income? Is your credit history good? Do you plan to stay in the same area for at least the next four years?
If you answered yes to those questions, welcome to the housing market. It might be time to stop thinking of yourself as a tenant and begin the transition to homeownership.
You won’t be alone. According to the National Association of Realtors, about one-third of home shoppers are first-timers, meaning you’ll have plenty of competition in your likely price range. Here are some tips as you begin your search.
Get pre-qualified. Meet with a mortgage pro before starting your search so you know your price range. Fidelity Bank can give you a pre-qualification letter that shows how much house you can afford. It puts you in a stronger negotiating position because sellers know you’re serious.
Be flexible. First homes are rarely forever homes. You’ll likely move in a few
years, so be willing to compromise in a way you might not for future homes. Do you really need four bedrooms and an office at this stage of life? It’s probably not realistic to expect your starter home to be your dream home.
Schools matter. You’ve heard the real estate adage: location, location, location. That’s often code for school district, school district, school district. Even if you don’t expect to have kids the entire time you’re in your first home, a respected school district will help with resale when it’s time to move up.
Keep your search manageable. Many buyers find their home within days, but that doesn’t mean house hunting has to be exhausting. Do most of your research online and limit visits to only the strongest candidates. If you see too many homes, it will be hard to keep them straight.
Take photos and notes. The first photo you take of any prospective home should be its house number. Doing so will help you stay organized because it will be easy to associate the following interior and exterior photos with the right house. Take plenty of notes, too. It’s also a good idea to rate each home on a 10-point scale as soon as you leave.
Avoid paralysis of analysis. Did you just tour the ideal home—right size, good location, reasonable price? Make an offer. Don’t look at 25 more houses to be sure. There’s a decent chance you’ll return to your ideal choice only to find that someone else beat you to it.
Think hard about that fixer-upper. Ramshackle abodes can be seductive for first-timers. “Why, with a little elbow grease, we’ll make a killing on resale!” Procced with caution. Don’t guesstimate the cost of improvements. Get hard numbers—and be sure your total investment doesn’t outstrip the going price for homes in the neighborhood. Be sure to place a dollar value on your sweat equity, too. You don’t want to spend so much time improving your home that you never enjoy it.
Considering a condo? Ask lots of questions. Are most units owner-occupied or rented? Are the condo association’s cash reserves adequate? Are there any pending special assessments for extraordinary expenses? When analyzing your costs, don’t forget the regular monthly assessment—your share of the development’s ordinary operating expenses. Read and understand the condo documents (master deed, bylaws, rules, financial statements) to avoid surprises after you buy.
Insist on inspections. Some buyers waive inspections. You shouldn’t. Conducted after you sign a sales contract, an inspection should uncover any problems that aren’t readily apparent. If the inspector finds serious defects not disclosed by the seller, you should be able to back out of the deal. If problems are minor, you can bargain for repairs or price concessions.
The myth of 20 percent down. Don’t assume the housing market is out of reach because you can’t muster a 20 percent down payment. First-timers are often eligible for special mortgages that require little or no money down. At Fidelity Bank,for instance, we have several zero down options available.
Here’s a little secret: Life feels different when you’re a homeowner—more stable, more connected, more promising. So when it’s time to move in, expect to unpack some pride along with the dishes. Happy house hunting!
Bill Nickerson NMLS #4194
Feel free to call me at 978.273.3227 or email me here
The Mortgage Markets 