First-Time Buyers: How to Turn the Largest Investment You'll Ever Make Into the Best Decision of Your Life
First-Time Buyers: How to Turn the Largest Investment You'll Ever Make Into the Best Decision of Your Life
By Keith Loria
Purchasing a new home can be a huge undertaking, especially if you are in the market for your first home. That’s why it’s important to have an experienced real estate agent by your side to guide you along the way.
Almost every first-time buyer feels hopelessly confused in the beginning, but it’s important to remember that you hold the power and you shouldn’t feel forced into making a decision you are not comfortable with.
“In the world of real estate sales, you are the most important person in the entire process,” said John Adams, who has written six books on the process of buying and selling a home. “It’s easy to think everyone else carries more weight than you. The seller owns the house and has all the money. The agent talks fast and has an answer for everything. The lender may decline your loan application, and on and on. But the truth is that you, the buyer, are the one person in this transaction who makes it all happen. If you decide not to buy, the entire process comes to a grinding halt.”
According to the National Association of REALTORS®, the number of first-time home buyers rose to a record high 50% of all home sales last year, which can be greatly attributed to the first-time buyer tax credit which began in 2009.
For those looking to continue the upward trend in 2011, first-time buyers should consider a number of things to make the buying process as smooth a transition as possible.
First-time buyers need to look at their financial situation and crunch the numbers to see if now is the right time to buy. Chances are, the numbers they see today will be the best they will see for some time, which is why so many are considering homeownership.
Still, understanding the money that goes into a home purchase is important. The biggest mistake new buyers make is underestimating the costs of buying a house and maintaining it over time.
First-time buyers need to understand that it takes more than just the downpayment to purchase a home. When buying a home, one needs to consider the closing costs and future expenses that will come with the new property.
“As renters, people are accustomed to paying rent and basic utilities. As homeowners, you’ll also pay for water, sewer and trash collection,” said Ilyce Glink, author of “100 Questions Every First-Time Home Buyer Should Ask.” “Then there are property taxes, homeowners insurance and homeowners association dues, plus yard care, snow removal and other expenses unique to your location.”
Many experts agree that homeowners should have 1-3% of their homes’ purchase price in savings for improvements and surprise expenses. Mortgage experts also say it’s wise to have at least six mortgage payments in the bank after closing.
While those numbers may not be feasible for everyone, if you are spending above your means on a new home, you may quickly find yourself in financial trouble.
Inspections are also important for the first-time buyer, as they list repairs that will be needed for the home. A buyer should put together a short-term and long-term plan based on the inspection so they know how much money they will need in the months and years ahead.
Buying a home is one of the largest investments you’ll make and if it’s done wisely, it can be one of the best decisions of your life. Your real estate agent will help you do it right by providing you with a realistic price point for your home purchase and a clear understanding of monthly financial requirements.
For more information on purchasing your first home, contact our office today.
Lorna Calder is a RE/MAX REALTOR® helping home buyers and sellers in Kingwood, Atascocita, Humble, The Woodlands and Houston TX.
Licensed content reprinted with permission.