1. Start Behaving
You already know the drill, but it’s important: check your credit report and know your FICO score. It’s easier than ever to view your information, and fix it if needed. Credit Karma is a helpful free website and app that will show you your credit report with account information. Many credit card companies have also started offering FICO scores to customers, just check their website.
Be stringent and question every purchase. Remember that it’s virtually impossible to save too much money. Ideally you want to be able to make at least a 20% down payment on your home to avoid PMI (private mortgage insurance), and of course you want to have something left over in the bank. Buying a home can be magic—your money will continually disappear!
2. Determine What’s Most Important to You
Whether you’re looking across town or across the country, you and your partner need to communicate and determine what’s important when choosing your home’s location. Do you need quick highway access to commute to your job, or want to be in an urban setting near restaurants and nightlife? Or do you prefer a large yard, and some space between you and your neighbors?
How do you feel about yard work? Mowing the lawn, raking, snow removal, etc. can be incredibly time consuming and expensive if you plan to pay someone else to do it.
In my case, I opted for a larger home in an older neighborhood, exactly where the action isn’t. For me, it was easy. My Money Personality is Saver/Spender. Simply put, I chose to get more for the money.
3. Use a Buyer’s Agent
For a first time home buyer, contracting with a real estate professional to serve as your buyer’s agent can be invaluable. They find properties, schedule showings and ultimately negotiate for you. While fees and arrangements may vary widely, typically the buyer’s agent gets paid by splitting the commission with the seller’s agent – so it ends up as a no-cost service to you.
4. Be Aggressive but Realistic with Financing
Fixed mortgage rates are at an unprecedented low. Take advantage of this, but be realistic. Finance for as short a term as you can with a fixed rate, and then accelerate payments later if finances allow. (Check with your mortgage lender to make sure there are no pre-payment fees.) Try not to plan to refinance in the future if you can. There’s a good chance that rates will be higher, and you’ll pay additional fees. It could be hard to come out ahead later on.
5. Ask Questions, but Don’t Sweat the Small Stuff
It’s imperative that you have a home inspection done by a qualified inspector, which your offer should be contingent on. They may not catch everything, but they will be able to spot any visible, critical items that need to be addressed. Don’t be picky – if you really want the home, you’re going to have to accept things like a cracked piece of tile in the kitchen or the doorknob that the family dog chewed on.
While you have access to the current owners, look around and try and ask questions. The sellers will fill out a sellers’ disclosure statement that will have a lot useful information, but take a look around. What other questions do you have? Do you know exactly where the property boundary is? Ask them point out the pins.
6. Google It, Just a Little Bit.
It’s obvious that you should do an online search of the address of a property you’re interested in. The street view option is great for virtually exploring the neighborhood. Real estate websites like Zillow and Trulia have handy tools and advice too.
Many towns and neighborhoods have online community forums. Do your research, and don’t be afraid to join a group if required.
7. Take a Video
If it’s ok with the seller, walk through the home and take a video. If you’re serious about a property, you will watch it at least once an hour to answer questions that come up, either through conversation with others or in your head. You will also show it to dozens of people, even long after you have purchased the property. It is guaranteed to become your “before” if you plan to do any renovations or improvements to the property.
8. Take a Breather
Once you’ve purchased the property, take a breath before making changes. Unless there’s a project that you absolutely must do, wait at least a few months. Trust me, you will spend a lot of time standing around looking at your home. Give yourself time to change your mind or come up with new ideas as you spend more time in the space.
9. Keep Everything!
Whether you think you need it or not, keep every piece of paperwork, receipt and important email related to all pieces of the home buying process as well ongoing improvements. Keep a separate binder with monthly tabs to track utilities. Come tax time you will be glad to be well organized, particularly if there are deductions you may be able to take or state or federal energy efficiency incentives you qualify for. Plus if you eventually sell the home, you’ll have all of your records on hand.
10. Trust Your Gut
Buying a home is an important investment that should be a rewarding and satisfying experience. However, timing is everything. You may not find the property you’re looking for, and if your personal situation allows, it could be better to wait. The last thing you want to do is buy a home that’s not the right fit, and then spend more time, money and energy trying to change it. But if the right home comes along, it should be a very rewarding and fulfilling experience.