When my husband and I started looking for a house, it was an exciting venture. It was going to be a place for us to just make a life together, but we had no idea how to even start that process. Other than stalking Trulia and making a wish list, we weren’t really sure where to go first. Beyond it being a fun time in your life, it can be stressful if you’re doing it alone or never had to handle a transaction as large as this.
So, here’s what I learned after going through the process, and what I wish someone had told me when we started looking to buy a house:
Know what you need in a house.
This is important and something that I think might be overlooked. What you need is different than what you want. You might want lots of land, a pool and an in-home movie theater, but you don’t necessarily need that, especially in a first home. Think of how many bedrooms and bathrooms you’ll need to be comfortable, the style of house, the location, what kind of amenities you want near by. These are the things that you need to keep in mind, and if you decide you want a pool you can always add that later.
Know your financial limits.
Just because you can afford a $1200 mortgage payment doesn’t mean you should. Many websites will have calculators that will max you out or tell you that you can afford half of what you make towards a mortgage payment. But I think we all know that’s crazy, and you need to remember that life happens. If you max out your budget or give half of it to the mortgage, you’ll be in a pinch when you need some extra funds. Lay out a budget and see how much money you could comfortably handle without feeling paycheck to paycheck. So to sum it up, if the calculators say you can afford $1400, look for something at the $900-$1100 range to ensure you have enough of a financial buffer for “life happens” moments.
Interview your real estate agent.
There are hundreds of agents out in the world looking to help you find your house, but not all of them are going to have your best interests at heart. Don’t be afraid to go in and interview your agent. If you don’t like them, try someone else. The right agent will make the process seem stress free and fun, instead of a stressful nightmare. Our agent was wonderful, and always said what she would do if she was in our place, rather than giving us the typical jargon.
Shop around for loans.
There are so many types of loans, and many banks will offer them. Every bank will have different interest rates, some better than others, so make sure you don’t just choose a rate because you don’t want to research. There are loans made specifically for people in the military, people looking to buy in rural communities, and even no-money-down loans. One word of caution though: any loan that says you don’t have to put down money for a house sounds great but the reality is you’ll be paying no-money-down mortgages.
Have a solid down payment.
This might seem like a “duh” moment, but it’s very important. Most places will recommend that you have about 20%, and that’s a very smart thing to do. Not only will that help reduce your mortgage payment, but it also avoids having to pay Private Mortgage Insurance (PMI). PMI is basically insurance that the loan office takes out to ensure you don’t skip out on payments and leave them with a huge debt. This happens when you pay anything under 20% of a down payment. My husband and I put down a little under 15%, but we were fortunate to have our PMI paid off at closing. The more you can save, the better you’ll be when you go to buy a house.
But the biggest tip is just to have fun. You only buy your first house once – duh – so make these moments the best you can. Do your research, understand what you need for a house, and enjoy your new home.