1. Start Saving Right Away
The earlier you start saving for that down payment, the easier it gets. Most people start thinking about saving for a down payment when it’s too late. In order to avoid paying private mortgage insurance, or PMI, in the majority of cases you need to save up at least 20% of your future home’s value to use as a down payment. Even f you just graduated- or even if you’re still in college- as little as $50-$100 a month will make a drastic improvement when it comes time to really buckle down and save. The earlier you start to save the better off you will be!
Sometimes-actually at least once- life will throw you a curve ball. Sometimes it’s helpful, other times it can be the worst timing possible. Lets say a young couple living in a nice (but small) apartment is saving up to buy a home, and an unexpected pregnancy happens. As exciting as it is for the start of a family- they might feel rushed to buy a house, which seems logical and the best decision, right? WRONG!
There are lots of factors to consider when buying a home, and you can often benefit by searching in different areas and neighborhoods before you pull the trigger.
3. Build Your Emergency Fund
When you’re a first-time home buyer, it’s easy to be shocked by the many “extras” that appear in your monthly budget. Things that didn’t exist before–like larger utility bills, home repairs, and lawn maintenance–start adding up and making a huge difference in your bottom line. If you want to be as prepared as possible, build your emergency fund for several months–or even years–before you commit to the home buying process. The money will be there when you need it that way, which will make the entire purchase a lot less stressful.
4. Price-Shop for a Mortgage
The easiest way to get the best mortgage rates is to shop around as much as you can. It can seem daunting and time consuming to go to so many different offices and making so many different appointments, but it can be worth it in the end. Saving just a half a percentage point on an average-priced home could lead to tens of thousands of dollars in savings over the years.
5. Pay Attention During the Home Inspection
Home inspectors sometimes miss the little things that can still add up for you as a buyer. Many buyers think that since a home inspector can make or break the deal they don’t need to inspect for themselves. Unfortunately that can hurt buyers in the long run. Buyers can miss simple things like old water heaters, and if they caught it before they could potentially get it replaced or asked the seller for a credit. Bottom line–always inspect the home on your own and pay attention to the details.
6. Get a Second (or Third) Opinion
When you’ve fallen in love with a house, it’s easy to overlook things that may not be quite right. Unfortunately, those “love blinders” can cause expensive mistakes if you fail to notice something wrong with the property. That’s why it’s important to bring a family friend or relative along. Since they aren’t buying the property themselves, they’re more likely to see it for what it is. So get a second or third opinion from someone who isn’t blinded by love goggles. Different eyes spot different things, and friendly eyes will tell you the problems they see.
7. Shop Around for Homeowners Insurance
It can really pay off to shop around for the best homeowner’s insurance policy you can find. And don’t be afraid to move your other insurance policies and bundle them together—most insurers offer a generous discount if you package both your auto and homeowners policies, for instance. But your search shouldn’t just be for the cheapest policy you can find; this is likely the biggest investment you’ll ever make, so you want a high-quality policy that will serve its purpose if you should ever need it. So don’t shop just on price alone–consider the quality of the policy and its coverage options. If you ever need to file a claim, you’ll be glad you did. Another way to save some money on your homeowners insurance is to evaluate the actual value of your house’s contents, and insure them accordingly.
8. Don’t Go Furniture Shopping the Day After You Move In
Being a first time home-owner is extremely exciting and a milestone in many peoples lives. With that being said it’s easy to forget that your new home will bring with it a whole new set of expenses you’ve never had to worry about before. So before you go on a furniture-shopping spree, take some time to figure out what your new budget might look like, and what you actually need for your new home. Taking time will not only ensure financial stability, but also give you the opportunity to catch a huge furniture liquidation or sale!
We had a bunch of cheap furniture from our college days at our old apartment that we didn’t bring with us. By pure luck, we happened to stumble upon a liquidation sale at a furniture shop and outfitted our living room very cheaply, but it was really a mistake to decide that we needed new furniture for our new house. Upgrade it later on–you can have a few empty rooms for a while. Save up until you can afford what you actually want instead of buying furniture just to fill a room.
9. Offer to Help Others Move for Years in Advance
One Word: KARMA. How does this help you? Well, imagine over a three-year period that you help 10 different families move. When you move, you can call any of these people to help you move—and five families can unload a truck and unpack boxes at an astounding rate. What goes around comes around.
10. Know What You Can Change, and What You Can’t
When you buy your first home, the whole process feels daunting. The idea of spending thousands of dollars to replace or update old or unsafe systems or outdated appliances is especially unsettling and can seem like an insurmountable obstacle. But every home has some issues. Some of them are things you can live with, while some are things you can’t; some are things you can change, and some are permanent features. The number-one thing you can’t change about a house is its location, so remember: When you buy a home, you’re not just buying a house, you’re buying the neighborhood. Explore the surrounding area before you submit an offer and fully commit to the purchase. Meanwhile, other problems can be fixed, or at least endured until you are able to fix them.