The real estate market has effectively bounced back, which is evident in the growing number of new homeowners. With home buying rates steadily increasing in our region, many buyers are on the market for the first time – young professionals couples, and small families among them. At Network Real Estate, we’ve pooled our expertise to help you avoid the pitfalls that so many first-time homebuyers fall into when making their first property investment. Read on for our top 10 tips for first-time homebuyers.
1. Hire a Realtor. We’ve outlined all the reasons Why You Should Hire a Realtor, and they are particularly relevant to first-time buyers who may know little to nothing about the legal process of a home purchase. A good Realtor will look out for your best interest and help you avoid making a risky investment.
2. Research the real estate climate in your desired state, city and neighborhood. Your Realtor can help you analyze what houses typically sell for where you want to live.
3. Figure out what you can realistically afford. This may seem obvious, but you might be surprised by how many people end up tanking their investment when personal circumstances change or they simply can’t keep up. Spending more than 30 percent of your total household income on housing costs can put you at risk for being ‘house poor’ – an industry term for owning a beautiful home but not being able to afford much else. Don’t listen to lenders who encourage you to take on more than you can financially handle.
4. Similarly, assess how long you plan to live in your new home. Under the right circumstances, starter homes can be a great investment, but it’s important to know from the outset how long you plan to stay there to ensure that you make the right choice.
5. See if you qualify for down-payment assistance. Many states, including North Carolina, offer down payment assistance as an incentive to get people on the housing market. First-time buyers are prime candidates for this type of assistance. Ask your Realtor for details.
6. Get your mortgage loan pre-approved. Not only does this increase your credibility in the eyes of Realtors and sellers, but it also gives you an accurate idea of what you can afford on real estate.
7. Start shopping for a home! This is without a doubt the most exciting part of the process for first-time buyers. Once you have found your ideal home and your offer is accepted, the end is in sight.
8. Remember to include taxes, homeowners insurance and closing costs in your financial estimates. Your Realtor will work with you to understand when these costs will be due and how to execute them.
9. Get your home inspected. This is crucial to ensuring that you’re making a safe investment. Have the home professionally inspected during the due diligence period (between your offer and the closing) – don’t wait until you’ve already closed on the property! Your Realtor can put you in touch with trusted home inspectors in your area.
10. Get homeowners insurance. Plan to have insurance coverage starting on the day you close. Getting started on the insurance process in advance ensures that there is no gap in coverage.