The average age for first-time home buyers in the U.S. is around 33, a relatively young age for such a big life choice. That said, buying your first home at any age can be a stressful and time-consuming experience.
Luckily, there are a few crucial pointers that will help make the journey to homeownership a less bumpy ride. Here are five tips to get you on your way.
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1. Draw up a hard budget and stick to it.
Let’s say you're interested in a home, but you’re not sure it’s in your price range. That’s a problem. Before you start browsing, it’s crucial that you iron out important questions such as, what is the most you can afford? What is your ideal price range? To help you get started, use an online mortgage calculator to determine the maximum monthly payment you can afford based on the price of the home after you put down a down payment and over a 30-year-mortgage.
“Make sure your monthly budget considers the total mortgage and maintenance costs of a property,” says Maria-Stella Fountoulakis, a realtor at Halstead Property.
If you fall in love with a house but the monthly payment is more than you can afford, when including all your other fixed expenses, it’s time to move on.
You can also enlist the help of your bank’s loan officer to help you arrive at a figure. He or she will be able to tell you how much the bank will lend you and at what interest rate. While this figure doesn’t necessarily equal what you can afford to pay for a home, it will give you an idea of the most you are able to pay.
2. Make a short list of your non-negotiables.
Before you start seriously shopping, consider your lifestyle and values. What features would enhance your well-being? And what would make you miserable? From there, make a list of non-negotiables, says real estate company Remax -- from location, to square footage, to amenities -- that you must have in your future home. This will also help guide your realtor.
"There is nothing better than knowing exactly what you want, but it's hard to find everything in one property,” Fountoulakis says. “The best way to gauge your options is to visit open houses in the area and get acquainted with the local market. Visit apartments that are both above and below your budget to see how values differ with features and location.”
And reevaluate your list as you gain a better sense of what's out there and what you want.
3. Use an experienced realtor who knows the area and the market.
Your realtor can make or break your home buying experience. If you know where you want to live, try and get a realtor referral. Fifty four percent of buyers found their agent from a personal referral or had used an agent they’d worked with before, according to 2014 figures from the National Association of Realtors. So start by asking friends, family or friends of friends who live in your area of interest for recommendations. If that fails, real estate websites Streeteasy, Trulia and Zillow all have ratings on local realtors.
“A good realtor has knowledge of the area -- a great time saver -- and more important is his or her ability to listen and execute what you are looking for,” Fountoulakis says. “A good realtor will be in your corner until the closing -- and, in some cases, beyond."
An experienced realtor will also have contacts for loan officers and real-estate attorneys -- and can offer tips going in, such as having a copy of a mortgage pre-approval letter on hand from the loaning bank, to show sellers you’re a serious buyer.
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4. Check out comparable apartments and houses in the area to get an idea of pricing.
First time home buyers should look at comparable homes in the area they want to live, according to Bankrate. Thanks to real estate sites such as Streeteasy, Trulia and Zillow, there’s no excuse not to research what homes in the area you’re looking at have sold for recently.
If you’re looking in a particular apartment building, get a sense of what other properties in the building have sold for or are being sold for. This will give you an idea for what your starting offer should be when you’re ready to bid on your future home.
"Inform yourself and keep in touch with your realtor with any changes in your search,” Fountoulakis says .
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5. Ask the realtor about expected closing costs
Closing costs, which don’t include your personal packing and moving costs, can vary widely. Typically, they include the cost of hiring a real-estate attorney to look over your buyer-seller agreement and a home appraiser to evaluate the home before the sale, which is typically paid by the buyer.
As for the realtor’s commission, that’s paid by the seller, not the buyer. (Whew.)
Thursday, March 03, 2016