Purchasing your first home is a great accomplishment and an essential step towards securing your financial future. However, it is also a very stressful and overwhelming experience, as the process is complicated and fraught with unfamiliar jargon and unexpected expenses. Below are some tips to help you avoid common mistakes and make the process go more smoothly. Read on to find out the Tips for Investing in Your First Home.
Tips for Investing in Your First Home
The real estate market is generally fast-paced and once you find your dream property, you will need to move quickly. Accordingly, preparation is key! Before you start the hunt, plan on cleaning up your credit score by making sure there are no mistakes on your credit report and working to boost your score by paying down credit cards and most importantly, avoiding late payments.
Also, save for a larger down payment so that you can qualify for a better mortgage rate. Lastly, plan to get preapproved by a mortgage lender, who has checked your credit and verified your income and assets; this will give you an edge in a competitive market.
2. Have a Checklist
Make a checklist of your non-negotiables, negotiables, and other preferences. Think long-term and consider resale value when determining what kind of property you want to purchase. Force yourself to stick to your checklist of non-negotiables so you do not settle for a property that you may not be happy with in the future.
3. Make an Offer
Evaluating comparable properties (i.e. of similar size, condition, age, and style that recently sold in the neighborhood) and their prices help determine the fair market value of a property. Your broker can give you a reasonable price range and help to manage your expectations. Use your flexibility as a first time homebuyer to your advantage! Have your broker discuss the seller’s situation with the seller’s broker to determine if the seller will benefit from a longer closing window or an option to rent back upon closing.
4. Have a Professional Power Team
For a generation that uses apps for most dealings, the need for professional help may be counterintuitive, but a good team, i.e. your broker, mortgage broker, and attorney, will guide you through the purchasing process. Work with professionals who have experience in the specific market you are purchasing in. Ideally, it is best to work with professionals who have been referred to you; however, if you hire a “team member” without a personal referral, ask the professional to provide references from previous buyers/clients.
Every three years, the Federal Reserve conducts a survey in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). In a recent Forbes article, a chief economist predicts that the net worth gap for the 2014-2017 years will widen even further to 45 times greater. It is time to use the Tips for Investing in Your First Home from above to take the plunge, purchase your first home, and watch your net worth grow!