The path to the American Dream is one filled with anticipation and excitement as first time home buyers take that big step into ownership and securing one of the biggest purchases they will ever make. Along with the excitement and anticipation of home buying comes great responsibility and some risk which can be a scary, confusing, and stressful. Before beginning your house search, here are some tips that will help turn an overwhelming experience into a rewarding search that may just yield your very first home sweet home.
Determine a Realistic Price Range
One of the most common mistakes first time home buyers make is buying a home they really can’t afford. Banks are skilled in assessing the amount of monthly debt you incur in the form of mortgage, insurance, credit cards, student, and car payments. But they have no way of knowing the amount you spend on groceries, entertainment, and utilities. When taking the leap into home buying, make a list of all monthly expenses, excluding mortgage or rent. Whatever is left after your monthly expenses are paid is the amount available for a mortgage payment and housing expenses such as taxes, insurance, and home maintenance. Guard carefully against considering homes you cannot afford.
Being approved ahead of time to purchase a home within a particular price range is critical to keep a deal from falling through due to failure to obtain financing. A pre-approval letter will give you some power to negotiate on the home’s price because pre-approvals are far more appealing in the negotiating process than offers without them.
Pre-approval is not the same as pre-qualification. During pre-qualification, the lender estimates what you can afford. With pre-approval, the process is more involved and your credit is evaluated as well as your financial background.
When making a list of the desires you have for your first home, remember that there is a huge difference between needs and wants. Needs might include a certain number of bedrooms, square footage, school district, or drive time to work. Needs cannot be changed without substantial cost and should be highly considered and even labeled “non-negotiable” in the search process.
Wants are things you desire in a home, but can be flexible with. You may want a hot tub, extensive landscaping, or a finished basement, but it doesn’t have to be a deal breaker if the house doesn’t include one of these things. Ideally, your new home should include all of your needs a several of your wants.
Pick a Neighborhood
A large part of the home’s value is the neighborhood in which it is located. Take time to evaluate your commute, traffic surrounding the area during rush hour, and proximity of places you frequent such as church or the library. Be sure to drive through the neighborhood at different times during the day to get a complete picture of what it would be like to live there during a normal day. Talk to neighbors, especially ones surrounding the home for sale. Bad neighbors make for miserable living conditions and poor property value.
Once you have these basic things down, have fun touring houses and finding your dream home. Louisville has a number of neighborhoods to offer based on your lifestyle and plans for the future. If building a home is more appealing to you, I’d love to talk to you about your plans. Connect with me here.