The year I turned 22, I was graduating from college, planning a wedding, and buying a house. It was a busy year. Home buying is a learning process; here are some real estate tips from my first time home buyer experience.
Your agent is your friend
There are many Web sites and guides available to prospective home buyers. With a quick search, you can find real estate, calculate mortgages, and apply for loans. Despite all of this information at our fingertips, my fiancé (now husband) and I were still much more comfortable hiring a real estate agent to help us through the process. Looking back, this was the best decision we could have made. In addition to insider information on newly available properties, our agent also knew how to better communicate with banks. Additionally, he shared a wealth of knowledge from his years of experience-noting that a concrete basement with freshly painted floors and walls may have had water damage.
Search in springtime
Especially for home buyers in the Northeast, house hunting in springtime allows you to survey your property at the season’s thaw. Does your house leak? Does the backyard flood? Spring is the best season to find out.
Saving up a healthy down payment helped us in a number of ways. Loan approval is easier to negotiate when more money is available up front, and a sizeable down payment will lower your monthly mortgage payments. In our case, the additional funding also gave us an advantage over our bidding competition. It is also good to have some additional money available for closing costs, which can include: Broker fee, title cost, filing fees, any money going into escrow, and other closing service fees.
Home buying time is math time. You will be calculating down payments, interest rates, insurance, and more. While you have your calculator out, make sure you also take the time to calculate your debt-to-income ratio. Total your income after taxes, and then subtract your estimated mortgage, insurances, and any other loans (education, car, etc.). If possible, ask family and friends in the area what they spend on utilities. Factor in those figures, too, and then subtract money for food and chance variables. Will you have any surplus income after bills? Your debt-to-income will give you a good picture of your financial life with the burden of a house.
Good luck on buying your first home!