I don’t know if buying a home is still the American Dream, but it’s still my goal. I use that word “goal” over “dream” because, well, a person eventually has to wake up from a dream, whereas a goal is a plan that can be worked towards.
That said, buying a home sounds more like a dream these days because the market is hotter than almost ever before. Seriously, look in any city that a young person would really want to live in and house prices are insanity.
For instance, I live in Seattle with my fiancé right now. Between the two of us, we make a healthy income, don’t carry a ton of debt, don’t have any kids and, generally speaking, keep bills and spending down. Want to know what we can afford on a home in a good neighborhood? Nothing… unless we want to share a 400 square-foot studio for $625,000. I wish I were kidding.
Likewise, she and I decided to look at buying a house in Nashville while recently visiting there since the market isn’t as extreme. But, surprise, it’s still blowing up, with houses being plucked by buyers before they even become available to the public.
So what’s a guy got to do in order to buy a first home? Get educated.
Short of getting my real estate license, this entire process of buying a home has taught me one thing: I knew nothing.
I didn’t know the stipulations about a down payment. I didn’t know how different tax laws are in each state. I didn’t know the first thing about getting the right loan for a mortgage.
What To Know When Buying Your First Home
But after doing some research and meeting with the right (and smart) people, I now have a few tips on things to know when buying your first home.
Take a look below at some advice.
Figure out why you’re interested in buying a house
Is this an investment property just so you can get into the market? Is it a primary residence? Is it a project that requires building or renovating? These are all questions my fiancé and I have asked ourselves as we’ve gone through the early stages of buying a home.
Once you define personal goals, it’s time to focus on the financial goals and start determining what you can afford. Sure, it’s fun to look at million-dollar listings on various apps, but be realistic about what you can buy so not to be discouraged if it’s less house than you hope for.
Understand What To Save For A Down Payment
Here’s a gigantic lesson that I had to learn: It matters whether you’re planning to own a home to live in versus owning a home to rent out. In fact, the difference could literally be hundreds of thousands on a down payment.
For instance, if owning a home as a primary residence, a down payment should be about 3.5% of the overall price. On the contrary, if owning a home to rent, you should expect anywhere between 20-25% of the house price for a down payment. See, told you that’s a big gap.
You may have visions of becoming a real estate mogul and building an empire right now, but you’ve got to do some homework to figure out what you need to pay upfront before even thinking about buying your first home.
Trust The Process – With A Knowledgeable Loan Officer
Buying a house is the beginning of an exciting new life chapter – a chapter with a big financial commitment.
When it comes to the mortgage process, you want to work with someone who specializes in helping first-time buyers make their dream come true; who will guide you through every step.
You want to work with someone like the Andrew Eckstut Team at CrossCountry Mortgage.
Andrew’s team of skilled experts helps you navigate the mortgage waters as a first-time buyer. They’ll guide you through all the necessary steps in the home financing process.
Compare Loans For A Mortgage
Obviously, not every mortgage is the same. That’s why it’s critical to understand what’s best for your situation prior to just falling in love with a house.
Even when you think you make plenty of money and have a solid amount for a down payment, there are still things that can hold you back from getting approved — like how you earn your income, your credit situation and fact-checking financial documents.
Buying a home isn’t like buying a loaf of bread, so be prepared to hear “no” more than you might initially think. This is especially true when buying your first home.
Shop! Shop! Shop!
Asking fancy questions like “can I see the comps?” might make you feel stuffy, but, yes, you need to see the comps! Comparing prices in and around the areas where you’re interested in buying a home is crucial to making the right choice. Nobody wants to overpay on a house that’s priced $50,000 more than the house two doors down — and where the rest of the neighborhood is hundreds of thousands less.
Drive through some neighborhoods to see what’s around. Look for the types of cars in driveways to get a feel for the cost of living. Use apps and notifications to try and stay ahead of properties being listed. Meet with an agent to get introductory questions answered. These will all help you weigh which homes and areas you like against the ones you brush aside.
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