So, you’re ready to purchase a home? Congrats! As Suze Orman says, “Owning a home is a keystone of wealth — both financial affluence and emotional security.” There’s no place like a home of your own, but for the first-time homebuyer, what follows the decision to buy can be both overwhelming and intimidating. Here are some tips and tricks to consider before you start house hunting.
1. Hire The Professional
You’re about to execute the biggest investment of your life. Work with an expert who can guide you through the process! You’ll need someone who understands current market conditions and can evaluate a property, negotiate, walk you through the paperwork, and more. Professional buyer’s agents have the tips and tricks to help you save the most money, and they often don’t cost the homebuyer anything. (Pssst! We can help you.)
2. In a Few Years, Everyone’s Going to Wish They Bought Now
Interest rates are at a historical low — mortgage loan rates are currently at 4 percent! Now’s the time to buy because those rates might soon go up. And Steve Murray, owner of Real Trends, reports that homes will steadily appreciate in the next 8 years. Consider your new home a smart investment.
3. Getting Pre-Approved Should Be Your First Step
How much home can you afford? Many potential homebuyers overestimate the down payment and credit scores they’ll need. Pre-approval will tell you how much you can afford and give you confidence to dive into competitive markets. Plus, you’ll need an ironclad pre-approval letter for a winning offer. If you can’t find a bank willing to lend to you, consider an FHA loan. The Federal Housing Administration insures the mortgages of many first-time homebuyers. And, they’ll only require a down payment of 3.5 percent.
4. You Should Buy Smart (Buy the Ugly House)
Buying smart is buying good location, flow, light, amenities, and space for the price. The homes your realtor takes you to see aren’t always going to look like Pinterest masterpieces. If you can see past clutter and outdated decorating, there’s a good chance you’ll buy into property with more equity after minor cosmetic overhauls. Visit those sloppy listings that other buyers are overlooking, and have vision!
5. Sometimes, Speed is Key
If you come across a well-priced property, don’t hesitate to put in an offer. Hesitation opens the door to competition from other potential buyers, and when someone else wants it, the seller’s more likely to raise the asking price.
6. Strengthen Your Good Faith Deposit
When you execute a purchase contract as a homebuyer, it will specify how much you’ll initially put down to secure it and show “good faith.” In other words, it’ll show the seller how badly you want this property — and how serious your offer is. Increase your good faith deposit from the usual $1,000 to as much as $10,000.
7. Be Aware of Additional Fees
Yes, you’ll need to put a deposit down of about 5 percent. But did you know you might also need to pay for additional closing costs? Home inspection, appraisal, oil left in the home’s tank, one year of homeowner’s insurance, seller adjustment for taxes and condo fees, and next quarter’s tax payment can all add up. You’ll want to have extra cash for home improvements, surprise fixes, and furniture to make that house a home. Before buying, pay down your debt and have money in the bank.
8. Be Flexible — and Realistic
We’re fortunate to live in Greater Boston, a hot market where there’s continuously a demand for real estate. That being said, certain towns have extreme competition! If you’re uncomfortable paying tens of thousands over asking price, be open to shopping in a more gentle market. Don’t commit to more than you can financially handle.
Ready to buy? Using cutting edge strategies, Erica & Mike help buyers save money. We’re happy to guide you home. Contact us here or call 857.529.SOLD (7653).