1st time home buyers are a very important factor in the housing market. As new buyers enter the market, it allows for other home owners to sell their property and “move up” into a larger home or “move down” into a smaller home. 1st time home buyers drive housing prices higher, allowing existing home sellers to keep the equity they have built up in their homes. Without 1st time homebuyers, the real estate market would stall and prices would drop.
If you are considering buying your first home, here are 5 very important tips to make sure that you don’t make a mistake.
1) Relax. Good things come to those who wait.
We all know the feeling: You are tired of renting a small apartment or living in your parents basement. The bank is willing to offer you hundreds of thousands of dollars in mortgage funds and you can’t wait to just buy anything! As exciting as it is going to be to buy your first home and move in, you want to make sure you carefully examine the important factors. Location, functionally, commute, neibourhood, condition of the home…Take your time and make sure you are purchasing a good, solid home that you will enjoy, and not regret?
2) What’s your 5 year plan?
Are you planning on getting married and having children in a few years? Will you be moving jobs? It is very important to consider your near future and how it will affect you in a few years. It can be very expensive to move. You will need to pay realtor fees, legal fees, mortgage fees… SO try to choose a home where you will live comfortably for 5 years.
3) By a starter home or go big?
If you can afford to do so, it might even be better to buy a home that you will be able to live in as your family grows. If you can purchase a large home that you will not outgrow, then you will save money by not having to move.
4) Don’t over extend.
Even when considering tip number 3, it’s also important to not over extend your finances. So if you have $20,000 for down payment and the bank is willing to lend you $400,000, then do you look for a home for $300,000 or do you look for a home for $420,000? Most people look for a home in the $420,000 range. And then you end up paying $450,000 in a bidding war and borrowing money from your parents. Right? Bidding wars are exciting, aren’t they? Does it feel good to “win” a home by paying significantly more than the home should be worth?
5) More Patience is needed.
After you purchase your home, you will most likely have no money. There will most likely be some renovations you would like to do. There will most likely be new furnitures and new TV to buy. One good tip, after you purchase you first home, is to simply wait before buying new furniture or doing renovations. It is wise to live in the property for a period of time so that you can understand how you use the home. You will realize which rooms are important and where you should spend your money. For example, one common mistake is spending $5,000 on living room furniture and then realizing that no one ever uses that room.
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