If you’re watching this right now, you are already on your way to buying your first home – congratulations! That is absolutely awesome, and we are here to help those buying a home for the first time with what you need to know.
If you’re just investigating and still not sure if it’s your time to buy or not – check out another video that we made after this called “When to Buy a House.”
Ok, now – from financing to making sure you’re buying the right place at the right time; we’ve got you covered with 7 essential topics to know. Let’s get to it!
1. You don’t need 20% down.
Most people simply assume that you need 20% down on your first home. After all, this is the general number that people toss around when discussing general real estate – but it’s not the only number. Nowadays there are plenty of financing options for anywhere between zero – that’s right, zero! – percent down to 20 and above. Do note that putting down anything less than 20% will tack on private mortgage insurance, or PMI. This is a small monthly fee you must pay until you reach 20% down on your home.
Ok… other options. If you’re in the military, a veteran, or married to a vet, VA loans offer 100% financing with no down payment required, as well as no PMI! An alternative for non-military-associated folks is an FHA loan, which requires down payments as low as 3.5% and up. These are great options for those with limited savings and/or lower credit scores. There are also other options, like a Conventional 97 Loan, Piggyback Loan, and others.
2. There are more mortgage options than your bank offers.
Most people go straight to their banks to try and get a mortgage, but you’re cutting yourself short on this route. Instead, opt to connect with a mortgage broker. This is essentially a middleman who takes your information, gets out there, and looks for the best mortgage option for you. He works with tons of lenders from banks to credit unions to privatized equity, gets you the best option, and then gets paid by whoever that mortgage lender is. These guys are a free tool for homebuyers and do a lot of legwork for you. Find a local one on Google and make sure they have positive reviews.
3. You may qualify for free money towards your home.
Most states have some sort of first-time homebuyer program or grant to assist with buying your first property. Some have additional grants depending on your job. First responders, teachers, social workers, and the like have the highest possibility of getting a first-time homebuyer’s grant. In fact, I qualified for one of these myself last year and was given $10,000 towards my closing costs! There are some caveats, of course, but you just have to discuss the fine print before you sign, like with all things. Oh, and a mortgage broker can help you find these assistance programs too!
4. The inspection process is crucial.
It’s easy to fall in love with a beautiful person only to find out their interior is equal to a rotting pile of trash. And no one wants to date trash. While we aren’t talking about dating today, buying a house is just as big as a commitment – maybe even bigger, because you can’t break up with a house from one day to another! That’s where your inspection comes in. You’ll likely need to hire a licensed inspector to tell you anything and everything that’s wrong with the home before the sale goes through. Make sure you find one that is registered with the state and reliable and pay close attention to the state of the roof, foundation, plumbing, electrical, and HVAC systems. That, plus any mold or water damage. These are heavy-hitting expensive things to fix that can add tens of thousands of dollars to the home’s price tag.
5. The neighborhood – and neighbors – are just as important as the house.
A dream home is more than just your interior design and landscaping – it is also what you’re surrounded by. Your home sweet home could easily become your H-E double hockey sticks if you’re constantly surrounded by chaos. You may not find the perfect neighborhood ever for your first property, but you’re going to walk to observe for safety, future developments, and your direct neighbors.
For safety, check out online crime maps like NeighborhoodScout and safety ratings on Zillow or Realtor.com. Future developments can be scouted on your city’s online business newspaper or magazine. Finally, and perhaps most importantly, are your neighbors. They may only be there a few months, or they may be there until the day you die or move out, so they are important. How do they keep their home? Is it full of trash, cars, and craziness or does it seem quiet and well-put together? Do a drive-by at night if you can. Trust me, nothing will ruin your peace faster than bad neighbors. Take all precautions.
Check out: Should I buy a house or rent
6. The best time to buy was yesterday and the second-best time to buy is today.
This old saying keeps ringing true. In real estate, timing is everything, but time in the market always beats timing the market. Generally, and historically speaking, prices tend to rise over time, and waiting too long can cost you more in the long run. Sure, the market can be intimidating, but no one has a crystal ball to predict the future. Sitting on the sidelines often leads to missed opportunities. If you find a home that checks your boxes and passes inspection, take a deep breath, get informed, and make that move! The sooner you start building equity in your own home, the better off you’ll be in the long run.
7. Everything works out for a reason.
I put in offers on three homes before I ended up with my current one and, looking back, it worked out for the absolute best. I was too over-excited on the first offer I put in and, knowing what I know now, that house would have been way over my head in terms of renovations. The second and third homes were up to date but had very sketchy or unkept neighbors that would have ended up being an issue. My last and current home, however, has been a huge blessing and success. All this is to say – trust the process. Everything happens in due time and for a reason, and you will end up with the first property you are destined to have. Enjoy the ride!