Are you ready to move past the rental apartment living of your youth and into a home all your own but don’t know where to start? As Chicagoland’s best moving company, we’ve had many conversations with first-time homebuyers as well as veteran homeowners, so we’ve compiled all the helpful information we’ve gathered here. We hope this post helps you avoid the common mistakes of first time house hunting to find your dream home and live regret-free!
Before You Start Browsing For Your First Home:
If you’re like us, browsing Zillow and Har.com is as addicting as TikTok. How can you not enjoy scrolling and daydreaming about your future seaside mansion!? Though it’s fun to fantasize about future homes, when you start seriously considering homeownership as your next major life move, there are a few things to keep in mind.
- Save, Save and SAVE for all of these:
- Down payments can be as little as 3%, but many first-time homeowners regret not saving for a bigger down payment as your initial down payment affects the amount of your mortgage and interest rate. The ideal downpayment is 20% of the cost of the home. Nerdwallet.com has a handy downpayment calculator to help you determine how much you’ll need.
- Closing costs can be anywhere from 2%-5% of the full loan amount, often you can negotiate with the seller to pay a portion, but these fees will still need to be considered when saving for your first home.
- Moving-In expenses; you’ll need to have money available for immediate purchases such as appliances, repairs, and furnishings.
- What can you afford?
- Consider current rent and essential expenses vs. income. If you are currently living at the maximum of what you can afford, ideally, you’d want your mortgage payment to be less than your current rent. Staying below budget would allow you to save for the incidental expenses that occur with homeownership. Unexpected repairs and home improvement projects should be considered in the monthly expenses.
- Check your credit and strengthen it with on-time bill payments and reducing your debt.
Tips Before Signing On The Dotted Line:
A mortgage will probably be one of the largest monetary commitments most of us will make in our lifetime. Consider the following steps before taking the financial plunge into your first home loan.
- Research the various types of mortgages to determine which will be right for you and your household. There are five main types of mortgages, conventional loans, jumbo loans, government-insured loans, fixed-rate loans, and adjustable-rate loans; learn more about each type here.
- Get a Pre-Approval Letter. What is this? “A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer.” This will assure sellers and realtors that you can get a mortgage as well as showcase how much lenders will allow for your home purchase.
- See if you qualify for Home Buying assistance offered by the federal and state governments. The U.S Department of Housing and Urban Development has an excellent resource page for first-time home buyers.
- Thoroughly research and consider your mortgage lender. Not all mortgage lenders are created equal. Many homeowners regret not shopping around for better quotes.
House-Shop With A Plan:
After you’ve done all the prep work and required research, bring on the open houses and realtor courtship! We have a few helpful questions to keep top of mind as you peruse your options for future home-owning bliss!
- What are your must-haves? How many bedrooms and bathrooms do you need? Kitchen size? Closet space? Garage? It’s important to map out what you need and what you can compromise on. You don’t want to settle and regret that you didn’t get that 2nd bathroom a year later.
- Who is my ideal Real Estate agent? Like mortgage lenders, real estate agents are not all the same. It’s important to find one that listens to your needs and works on your behalf. Yes, they want to sell houses, but they should also want to sell you the right house.
- Is location everything? Consider the neighborhood when shopping, you may find a house with everything you want, but the neighborhood is too far from work or isn’t close to schools. Everybody’s ideal location is different, don’t compromise on location. You can renovate a house in the future, but you can’t change the neighborhood.
- What is my budget, again? You must stick to the budget you’ve created for your home. Frequently agents will want to show you houses out of range, but be true to yourself and the goals you’ve set for your home purchase.
Your Dream Home Don’ts:
Once you’ve found that ideal house, there are just a few crucial things you must do to ensure that you’ve got the best home. Follow these final notes, and you’ll be tending to your new home garden in no time.
- Do not skip a home inspection. You’ll want to know whether foundation work or ceiling replacement is in your future. Does the house have hidden mold or pest infestations? If possible, try to attend the home inspection to ask questions and get to know your potential house.
- Do not be afraid to negotiate. You may be able to save money by getting the seller to pay for repairs prior to closing or shave money off the asking price. It’s always good to make sure that you are getting the best value for your money when it comes to such a large purchase.
- Do not get just any home insurance. Like every other step of the process, choosing the best comprehensive insurance is crucial. Lenders require home insurance, but they don’t require that you make sure it is quality. That is on you. Research and ensure that your home insurance covers your entire home and is affordable for your budget.
We truly hope that these tips will help you find the perfect home for your family. And when it comes time for the big move, 606 Movers will be there with you every step of the way!