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August 30, 2019

6 Things You Will Learn After Buying Your First Home

Buying your first home is sort of like having a baby.

You have a general idea of what it’s going to be like, but you don’t really “get it” until you do it.

Let us unlock some of those mysteries associated with buying your first home. To find out what it’s like to have a baby…well, that is the subject of another article.

1. Your Mom was Right: Patience is Important

You’ve watched hours of home remodeling shows, and you are ready to tackle some home renovation projects. You are tired of renting, and you feel that you are throwing your money down the drain when you pay your monthly rent. You want to buy a house, and you want it now.

 Although it is difficult, it really is best to be patient. Save as much money as you can before reaching out to a lending institution. Some first-time homebuyer programs will reduce the amount you need for a down payment, but most financial advisors would recommend that you save 20% of your home’s cost before looking for a home.

 Even if you receive some help from first-time homebuyer programs, you will still need extra cash on hand to pay for inspections, fees, and taxes.

 If you aren’t able to gather up that much cash, you will have to pay for Private Mortgage Insurance. Although this expense will disappear after you eventually earn enough equity in your home, having to make this payment may keep you from purchasing a nicer home in the first place.

 So eat PB&Js and drink cheap beer. You won’t regret putting off the purchase of a home until you have saved up enough to make a healthy down payment.

2. Choosing the Right Buyer’s Agent is Crazy Important

Try to find a buyer’s agent who would make a great teacher. If you are new to the home-buying process, you want to work with someone who will be patient and knowledgeable enough to answer every single one of your questions. 

Don’t choose a buyer’s agent because he or she is your cousin’s husband’s kid sister. Don’t pick an agent if he or she turns a blind eye to a crumbling basement wall or pushes you to make a decision.

Instead, find someone knowledgeable about real estate trends in your targeted area. Ideally, this person should live in the community and also point out the pros and cons of each home you tour.

3. The Closing Process is Intimidating

You’ve heard of “closing,” and you know that it is an essential part of the house-buying process, but you didn’t think you would leave your closing appointment with shortness of breath and heart palpitations. Sure, some of those symptoms may be the result of the excitement of being a homeowner, but they also may be from the number of legal documents you just signed that details exactly how much money your house will cost over the next few decades.

Talk with your buyer’s agent about the closing process. He or she should walk you through what will happen before the appointment. Your agent should be able to help you determine how much money you will need to pay for closing costs and fees.

4. Hidden Fees are No Joke

Speaking of fees . . . you’ll be paying a lot of them during closing.

Although the amount of fees and taxes depends upon your negotiation prowess and your state, there will be more fees than you anticipated.

For example, you may have to pay a mortgage origination fee or a mortgage application fee to your lending institution. This may be up to 1% of the amount of the loan.

Your lending institution will also have hired an appraiser to look at the house before letting you borrow the money for it. You will pay the cost for the appraisal, and that may range between $300 and $500.

To make sure your home’s title is free and clear, you will be required to purchase title insurance. You may ask the seller to pick up this charge during the negotiation process.

You may also ask your seller to pay for the real estate transfer tax. Although the name of this tax varies from state to state, you will probably be required to pay some similarly named tax to your state and local government during closing.

More than likely, you will have had your home inspected by a professional, and you will need to pay the inspector if you haven’t already.

Finally, you need to make your first monthly payments for your homeowner’s insurances and property taxes. Depending upon where you live, you may also have to make a payment for your home association fees.

5. Try to Keep Your Emotions in Check

No matter how much you like a house, it isn’t yours until you sign the papers at closing. At any other time of the process, the sale can fall through.

There are a lot of things that can happen that will keep you from closing on a home.

The inspector may uncover a problem with the foundation, roof, or major system that will cost thousands to repair. The homeowner may not be willing to negotiate, which will force you to remove the offer on the house.

Perhaps you make an offer on a home, but another buyer swoops in with cash, and the seller accepts that offer instead.

Some homebuyers are so excited about purchasing their first home that they buy roomfuls of furniture using a credit card. First-time homebuyers may not know that their finances are rechecked right before closing. If your financial health changes at the last minute and you charge so much money that you are now considered to be a risky borrower, you may lose your loan.

It’s not over until it’s over. Wait until after closing to call the home “yours.”

6. Good Neighbors are Just as Important as a Good Electrical System

Often first-time homebuyers focus only on the condition of the home they intend to buy. Instead, homebuyers need to look to the right, back, and rear of the property line as well.

Although you probably will not have an opportunity to meet your new neighbors before you close on the house, you can learn a lot about them by being observant

Look at the condition of their homes and outdoor spaces. Make sure they are following city or subdivision rules regarding trashcan placement and parking. Check to make sure their tree branches and bushes are neatly trimmed along your property line. Look at the condition of the fences. Listen and look for vicious dogs. 

If the neighbors seem to be tidy, they will probably expect that you are neat as well. If you don’t feel as if you can follow the trends of the neighborhood, you may consider looking for a home on another street.

Good luck with your first home purchase. Hopefully, the process will be painless, and you will have the key to your new house on your keyring before you know it!

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