Buying a home is always an adventure. But never is it more exciting, nerve-wracking, and confusing than when you’re doing it for the first time.
If you’re a first-time homebuyer and you’re looking for ways to make this process simpler and smoother, you aren’t alone. This is a topic that doesn’t get nearly enough focus and discussion.
In this article, we’ll attempt to address this lack of education by providing you with some useful insights into how you can find the right house for you and your household.
6 Tips to Help You Find the Right House
No two home buying experiences are identical, but adhering to the following tips, rules, and principles will increase your odds of finding the ideal house. Check them out:
1. Set a Budget
Never go into a home shopping process without having a concrete idea of precisely how much you can/want to spend. A failure to articulate your financial constraints will put you in a position where you could become house poor.
Everyone has their own comfort level with spending, but a safe strategy is to spend no more than 25 percent of your pre-tax income on housing. (If you’re making $6,000 per month, this means your house payment should be no more than $1,500.)
2. Zero in on Good Neighborhoods
When you’re a first-time buyer with a strict budget, you don’t always have access to the best neighborhoods in town. But that’s okay. You can stretch your budget much further – and increase future return on investment (ROI) by purchasing in an up-and-coming neighborhood.
According to Green Residential, “Up-and-coming neighborhoods are a long-term homebuyer’s ideal situation. Essentially, this means the neighborhood isn’t currently in perfect condition. It may have a higher-than-average crime rate or might be lacking certain amenities. But it also has a lot going for it, and over the next several years could easily become one of the hottest neighborhoods in your city.”
As long as you’re planning on staying put for five-plus years, buying in these neighborhoods is generally a good investment. If you aren’t sure of where these neighborhoods are in your community, ask an experienced real estate agent for advice.
3. Look for Ways to Add Value
Real estate is always an investment – but it’s especially important that first-time buyers view it through this lens. It’s highly unlikely that your first house will be the last house you ever buy – thus, you have to look ahead and consider resale value in three, five, or 10 years from now.
Look for opportunities to add as much value as possible. This includes:
· Homes that are in need of lots of cosmetic upgrades
· Homes that have unfinished square footage (basement or attic)
· Homes that are on large, private lots
· Homes that feature quality construction and materials
If you buy a house that satisfies some or all of these points, you’ll have no trouble increasing its value over time.
4. Shop Lenders
Not all lenders are equal. Mortgage lending is a business just like any other. Different companies offer better rates and lower prices than others. By shopping around for rates, you could potentially save thousands of dollars on the purchase of your home. (Not to mention tens of thousands of dollars over the life of the loan.)
5. Select an Experienced Agent
Chance are you know at least a couple of people who are real estate agents. You might even have some close friends or family members who are in the business. And while there’s nothing wrong with hiring someone you know, be cautious not to work with an agent just because there’s a personal connection.
Buying a house isn’t a casual process or a minor decision. It has the potential to change your life (for better or worse). Hire an experienced agent who understands the market and is a skilled negotiator. If this happens to be your friend, great! If not, you’ll need to have a tough conversation.
6. Don’t Get Emotionally Attached
This is easier said than done, but do your best to avoid getting emotionally attached to specific properties during the home search process.
The best way to avoid emotional attachment is to see a lot of houses. As the quantity of options increases, you’ll come to understand that there are plenty of properties to choose from.
It’s also helpful to bring someone along who is less emotional and more pragmatic. This individual will balance out your tendency to make emotionally charged decisions.
Make the Right Investment
In real estate, there’s always some push and pull between risk and reward. You make the best decisions with the information and resources you have available to you and hope that you’re making a smart decision that benefits you both in the short-term and long-term. And if you follow the tips outlined in this article, you stand a better chance of enjoying your home and eventually generating a profit.