7 Lessons I Learned as a First-Time Homeowner
As a first-time homeowner, I can honestly say the home purchasing process, from beginning to finish, was a huge learning experience. When I finally got the keys to my new home, the entire experience was well worth it, but there were many times where I was seriously considering renting for one more year. Now that I am in my new home and enjoying this investment I just made, I now know that if and when it is time to buy another home, I will be well-equipped. For those out there about to jump into the home buying process for the first time, here are just a few of the lessons I learned along the way.
Take your time
Buying a home takes a lot of time. From researching lenders, to finding a great realtor, and then finding the perfect home, the home buying process takes a year. I did not do this. I decided within four months that I must buy a home before my current lease runs out or else, I’d be devastated. Looking back, I’m sure I would have gotten over it if I held off for one more lease. Unless you are dead set on purchasing a home in a set time period, like I was, try and take as much time as you can in finding a perfect home for you and your family. It will take a lot of stress off your shoulders and also help mitigate the margin of error during the loan application process and during negotiations.
Know what you want before the search
I thought I knew what I wanted before I started my home search, but I was wrong. I didn’t know the number of rooms I needed. I didn’t know if I wanted a fixer-upper, turnkey, or brand new construction—the possibilities were endless. It didn’t help that the area where I live has a ton of new homes available due to the city’s massive growth.
Very quickly into the search, I got overwhelmed with the number of options and, as someone who is pretty good at making decisions, this was one decision that was very tough to make. Try to have a set list of non-negotiables that specify what you absolutely need in a home. After that, make a second list of things that you really want in a home, but aren’t complete deal breakers. Lastly, make a third list of items that would simply be cool to have in your new home. This information will help narrow down your search substantially.
Get pre-approved beforehand
I dove head first into my search based on what my estimated monthly mortgage would be, without actually getting pre-approved. Turns out, what you’ll actually pay monthly for your mortgage is a lot lower than what you think you’ll be paying. Take taxes, home insurance, flood insurance (we have this is my area and it is very expensive), and mortgage insurance. All of these will need to be added into your monthly mortgage and can substantially affect the cost of your home.
Along with that, the typical rule of thumb for rentals is that you need to make three times the cost of your rent. This rule of thumb tends to be much stricter when purchasing a home so keep in mind that what you’re paying now for rent may not be the same for getting approved for a mortgage.
Hire an experienced realtor
Don’t hire your friend who just got their real estate license to help you find a home, and don’t think you can just speak with the listing agent when you find a home you like. As a first-time home buyer, both of these are horrible ideas. You want a well-seasoned real estate agent to help you through the entire process. Be sure to check out how long they have been working in real estate and ask for references. As for speaking with a listing agent directly, keep in mind that they only have their own interests and the interests of the current homeowner in mind. While the idea of saving in closing costs is tempting, you will more than likely be suffering during the negotiation process.
You can negotiate just about anything...so do it!
While there are some things that are best left off the table during the negotiation process, you really can work with just about anything. After having so many issues speaking directly with the listing agents, I was very glad that I decided to find a real estate agent. I was able to ask my real estate agent questions before buying. Bargaining enabled me to get an appliance protection plan with Choice Home Warranty in case any of the older appliances needed repairing in the future.
Drive by “for sale by owner” signs
This may not be the case for all areas and all homes that are “For Sale By Owner” but in my experience, it is best to stay away from these options. A home that is being sold directly from the owner means that they are not using the help of a real estate agent to sell their home. This can cause a lot of friction during the entire process of the home, especially due to the fact that using real estate agents on both sides help mitigate the personal friction between the owner and purchaser, along with their expertise in the market. Again, I’m not saying completely steer away from these homes, but go into it knowing there may be additional problems that arise during the process.
The process will keep you up at night…and it’s okay
Whether you take your time or rush into the home-buying process, it will cause stress. It doesn’t matter if you hire a real estate agent or search alone, and no matter the bumps along the road in the mortgage approval process, your home search will most likely keep you up at night. This is completely normal. You’re buying your very first house, after all. Just keep in mind, there is a light at the end of the tunnel—your very first home purchase. That makes it all worth it.