Real Estate 101: By the agent who lives here, plays here, owns here!
Buying your first home can be exciting – and overwhelming. Here are some guidelines to help you prepare for the experience.
First, do a little homework – about both your wishes and about the area you’re looking in. Decide what’s important to you…. do you need a certain amount of square footage? A specific home layout? A big yard? Decide what you must have, and what you can compromise on. Ask your realtor about comparable homes in your area, as well as the market trends for your area – is this a good time to buy? What are homes going for these days? How much difference in price will that big yard make?
Second, do some financial figuring. You need to know what you can afford (this is not the same amount as what lenders will loan to you) – most resources will recommend housing costs be less than 30% of your monthly budget. However, you need to consider your specific situation: if you’re used to paying 15% of your budget for rent, it may not be realistic (or possible!) to increase that amount to 30%. You’ll need to consider your total housing costs, including taxes and homeowner’s insurance. Also figure how much you’ll need for earnest money, a down payment, and closing costs. All these amounts vary, depending on the house you’re making an offer on, the type of loan you’ll be using, and what the seller is willing to cover at closing. Don’t forget you’ll need to save money for repairs or improvements. If the water heater goes out, or the roof leaks, you’ll need to be able to repair your home. Many homeowners contribute a certain amount each month to an “emergency” fund. If you plan to do the same, be sure you include that savings amount in your monthly housing costs estimate.
Getting pre-approved for a loan is a good idea. You’ll need to have your financial documents (paystubs, W-2s, information about other loans you may have out, etc.) in order ahead of time, and your lender can give you an approval letter. Remember, you don’t have to borrow as much as you’re approved for. Over-extending in order to purchase a house can leave you “house poor” and in a tight spot!
You’ll want to investigate the home and the neighborhood – a realtor can be a good resource for both these questions. Realtors will often have information about the neighborhood or town you’re considering, including how the real estate market has been trending, and they can often recommend a reliable home inspector – you want to be sure your investment is a good one!
Buying your first home is a huge and exciting step! With proper preparation it can be a great experience; don’t get swept up in the excitement though, stay realistic about your budget and make sure you’re purchasing a home you can afford comfortably – you want to enjoy your new home, not feel trapped or stuck.
I am excited to provide for you this weekly column. Please call if you have any questions or would like more information:
Rebecca Guthrie, Broker / Owner (970) 485-4141, firstname.lastname@example.org