What makes Christmas and New Year’s better than friends, family, and savings? How about owning a home? The holiday season is a cheerful time spent with family, but for those of us with families
5 Questions Every First Time Home Buyer Should Ask
How do you house shop? Most first-time homebuyers pick out a house before lining up their finances to make the purchase. But experts are convinced you should be doing the opposite. A call to a home loan officer should be the first thing you do, not the second or third or final step. However, before making the call, you need to do some serious thinking and ask yourself five crucial questions every first-time homebuyer should ponder.
#1: How Much Can I Afford?
One of the toughest and most dangerous tasks facing first-time homebuyers is figuring out how much they can afford. If you miscalculate, you could potentially enter into a home loan that you cannot afford over the life of the loan. Thinking you can afford more house than you really can is one of the leading causes of home loan default.
How can you figure out just which price tags are within your means? The first person to talk to is a home loan professional. Your real estate agent likely works closely with a few. Ask for a referral. They can help you take an honest look at your finances, from debt-to-income ratios to forecasting your financial future.
The biggest reason first-time homebuyers don’t talk to a lender first is because they fear being told no. If this is you, stop! There is nothing wrong with hearing no. In fact, it can be the bridge to building a strong financial foundation so that when you do become a homeowner, you’re not on shaky ground or doomed to default.
#2: What Are My Costs Outside of the Home Loan?
How much does buying a house really cost? If you think the price tag on home listings is the total, you’re wrong. First-timers often miscalculate the total tab for sealing the deal, and the cost – both financially and futuristically – can sink their dreams of homeownership.
One of the first things to tackle before house shopping is getting a clear picture of the financial funding required. How? Have a meeting with a lender and ask lots of questions, like:
How much should I expect to pay in closing costs?
How much should I plan to put down as a down payment?
If I use a first-time homebuyer’s program to assist with closing costs or my down payment, how does it affect the loan process?
What costs should I expect to pay outside of the standard home loan?
Online mortgage calculators don’t always give you the full financial picture. While they should, they don’t always include costs outside of the home loan. These can include taxes, insurances, utilities, and homeowner’s association fees.
You’ll also need to consider standard maintenance costs. When renting, the landlord took care of major appliance repairs and replacements, window and floor treatments, reroofing, and so forth. As a homeowner, you will be responsible for maintenance, both routine and unexpected. You’ll need a savings that’s continually growing to cover this aspect of homeownership.
#3: What Do I need In a Neighborhood?
The thrill of buying your first home can trump common sense. For example, have you thought about what you need in a neighborhood? Unless you’re buying rural property that’s far off the beaten path, the house you buy will be smack in the middle of an already built community. How you fit in and how it caters to your needs will determine whether your investment is a good one.
Create a wish list of all the things you’d like to see or have in and near a neighborhood. Think about schools, transportation, and ease of access to entertainment and conveniences. Identify your must-haves before you start shopping.
Neighborhood analysis is one of the most commonly overlooked elements of home purchases. But a great real estate company will have your back. For example, you can use our website to review hundreds of local neighborhoods throughout Hampton Roads. Search by area, like Virginia Beach, or by specific neighborhoods like Newlight and Sea Breeze Farms, just to name two.
#4: Will This House Fit My Long-Term Goals?
A home loan is a long-term commitment. It’s not like buying a car and paying it off in three to five years; it’s a 15 to 30-year payoff! First-time homebuyers have to consider whether the houses they’re interested in fit their long-term goals. You need to ponder:
Does this house give me enough room to grow?
Will this house require major repairs within the first five years?
If I have children, will I be happy with the school district?
What’s the current commute to work like?
If I have to change jobs, will I have local options that won’t dramatically increase my commute?
Sometimes, paying more for a home at the start is wiser and cheaper in the long run. Our lives change in dynamic ways, sometimes in as little as three to five years. You need to try and ensure the house you buy serves you well in the best and worst case life scenarios.
#5: Am I Really Ready For Homeownership?
If you see buying a home in terms of just the monthly mortgage payment, you’re probably not ready for homeownership because you’re still in a rental state of mind. Homeownership is a huge financial responsibility, and owning your own home costs money. It’s an enormous investment, not just on the day you close, but on every day thereafter.
Your financial attitude and outlook will greatly influence the success of this venture. Before jumping head first into the market, follow the advice of the experts. Talk to a home loan professional. Get a clear view of your current financial footing, and don’t be afraid of being denied right out of the gate. Homeownership is an investment everyone works toward, not one as simple as applying for an auto loan.
Don’t let your emotions rule your home buying transaction. Instead, plan and buy responsibility by asking these five first-timer questions and working together with reputable professionals including a lender and a local real estate agent.
Having lived in other cities, such as Cleveland and Idaho Falls, I only appreciate Hampton Roads that much more. Why? Because from almost anywhere in our area, a beach is only about a 20 minute dri....