Buying a home for the first time can be an intimidating and frustrating process if you’re not sure where to begin or how to deal with the obstacles you may come across. One of the easiest ways you can help yourself through this process is to hire a real estate agent. He or she will be able to walk you through all of the steps of buying a home, but you should do a little bit of the work too! Here are 5 tips to help you become a smart, savvy, first-time homebuyer.
1. Do some research on the average housing prices in the area you want to move to. This is called a comparative market analysis (CMA), which your agent can provide you with, if you ask. However, you can do your own research by looking at listing websites like Zillow or Trulia to get an idea of what the average selling price is of a type of home in a certain area. For this, it will be helpful to look at the prices of homes that are similar to the type of home you’re looking to buy (i.e. if you want to buy a 3 bedroom single-family home, don’t look at the prices of 2 bedroom condos).
2. Meet with your financial advisor to assess your finances and determine what you’d be able to put toward a house payment each month (this includes the monthly mortgage payment, taxes, homeowner’s insurance, and any additional fees associated with living in a particular area). You should take into account any current debts or payments you have, such as credit card payments, car payments, school loans, etc. as well as your spending habits. Subtract that from your monthly income to determine how much money you have to spend on a home. When you go to apply for a home loan, the lender you meet with will go through this same process, but it’s safer to determine for yourself how much you can spend, rather than rely on a lender. After all, if you are unable to make the monthly payments, it’s your problem, not theirs.
3. MSN recommends using their Real Estate’s home affordability calculator to tell you how much, total, you should be spending on a home. If you’re looking at a particular home, you can find out what the taxes were for that house for the previous year. You can also call the utility companies and ask about how much utilities will cost for that property for a year’s time. Call local insurance agencies to get an estimate on how much homeowner’s insurance would cost for the type of home you’re interested in. This is a great way to get an accurate idea of how much owning a home will really cost.
4. Figure out how much you’ll be expected to pay in closing costs. This fee includes origination fees, title and settlement fees, taxes, and prepaid items (such as a homeowner’s association fee). You can find this information out by talking to your real estate agent, your lender, or even by doing some research online.
5. You should plan to spend no more than 28% of your income on the costs of owning a home, according to Fannie Mae. If you spend much more than this on your home, you could get yourself into serious financial trouble. Pick a home that fits your budget-this is the most important thing to remember.
For more first-time homebuyer tips, check out this article from MSN.