Nothing compares to the feeling of setting foot into your first house. Ask me, when I first stepped into my first home, I was overwhelmed with emotion. I was happy, excited, and proud. All my sweat and hard work had finally paid off, and I had the roof of my dreams over my head. Having said that, the process of hunting for the right house, going through all that tedious paperwork, and getting through the nightmare that is home inspection – I was honestly not prepared for this. Of course, I knew about all the mandatory steps that every first-time homeowner has to walk through to buy a home – get preapproved, keep your credit score up to mark, attend open houses… you know the gig. But what if I told you, there are countless other things to know before buying a house?
Yes, that’s right. Before you sign the dotted line and move into your first home, here are 5 crucial factors that you need to keep in mind. Trust me, I found these tips for first-time homeowners the hard way. I wish I knew these 5 things before buying my first home, it would have helped me avoid all the unnecessary stress and drama that comes with the set of house keys. But, now that I know these 5 things through personal experience, I am here to share them with you. So, keep reading to ace your real estate game as a first-time homeowner. You can thank me later!
1. Research your mortgage lenders
One of the most quintessential things to know before buying a house is that you need to take your time when it comes to finding a good mortgage lender. If you didn’t get the memo, different mortgage lenders offer different interest rates for the same amount of home loan. So, it’s best not to seal the deal with the first mortgage lender you meet. Even a difference of 0.5% to 1% interest rate can help you save thousands of dollars in your lifetime.
I wish someone had told me all of this earlier. I also wish someone had told me that before you finalize your home loan with the lender, you must go through all the lender fees and costs listed in your contract with an eagle’s eye. Trust me, you will find a slew of ‘junk fees’ that look like regular fees, but they will cost you much more than you can ever imagine. So, it’s important to research lenders in your area and consider your options before you settle on the best one.
2. Save enough for transitional/ongoing costs
One of the biggest mistakes I made in my life is that I didn’t calculate or save for the transitional/ongoing costs before buying my first home. So, while I had enough in my bank to cover the upfront costs, like the 20% down payment for my first house and first 6 months’ EMIs for my home loan, I did not save enough for maintenance costs or moving costs, which eventually led to me ending up in a financial puddle that was difficult to come out of.
So, while you save for the upfront costs, one of the most important things to know before buying a house for the first time (actually, every time!) is to save enough to cover at least 6 months of maintenance costs in advance. Secure yourself financially by also keeping in mind the many minute costs that can later add up to a mammoth expenditure. Buying your first home and moving into it are two VERY different things, and the latter part will be a headache to manage if you don’t have enough savings planned for the same already.
3. Ask for the property abstract
Once I moved in to my house, I received a letter from my local law firm in my letterbox, asking me to come and pick up all the abstract paperwork related to the house I occupy. When I reached there, I was handed a huge stack of papers and I was also informed that this is the only copy of the abstract paperwork that exists, and I must not lose it, as it’s really, really expensive to replace. To say that I was flabbergasted would be an understatement. I knew nothing about property abstract paperwork, its significance, or its necessity. After doing some research on my own, I found out that this stack of papers is probably the single most important thing related to my house that I could own.
This paperwork contained my house’s entire history – the history of the land it was built on, the history of the occupants that lived in it, and the history of its entire subdivision – it was like an encyclopedia of the house I currently live in! Turns out, one of the first things to know before buying a house is finding out if there exists a property abstract for the same, as it functions as a primary source of information about the house. It comes in handy when you want to sell your property later on. And if you don’t have it, it will cost a hell lot of money to create a new one. So, before you go ahead and buy your first house, ask if there is a property abstract for the same. It will do you good!
4. Address ALL the issues that crop up in your home inspection
When I asked for a complete home inspection, I wasn’t sure what kind of issues will crop up in the report. I was expecting that I wouldn’t have to deal with issues bigger than just some electrical outlets or piping work requiring a quick fix or average maintenance, but I was in for a shocker.
I found that some major fixes were due as well. The inspection reported rotting windows on the upper story of the house. I immediately informed the seller about it, and he was ready to pay the full cost of replacement. Well, I was lucky, but everyone isn’t. One of the most crucial things to know before buying a house is that if you don’t address every single issue that crops up in your home inspection report and talk to the seller about it to cover the costs of the same, you will be spending much more on it than you expected later on.
It could be a really small fix, but talk it out with the seller and ask him/her to pay for it, so that you don’t have to regret turning a blind eye to it in the future.
5. A good realtor is gold – so don’t skip out on one!
You know the basics of buying a home (even if you are a first-time home buyer!). You need to get your credit score checked, improve it if it’s not good, get preapproved for a home loan, and find a good realtor to find a good home. While all the other steps are objective in nature, the last one is subjective, but as mandatory as the rest. A good realtor is gold when it comes to buying a new house, especially your first one – so don’t skip out on one!
I initially made the mistake of going along with the first realtor I met. Soon, I realized he didn’t care if I find a house that fit all my needs and requirements, he was only concerned about selling a house to me and making a quick, huge chunk of commission out of it. And that was bad. I wish someone had told me how to find a good realtor. Anyway, I learned through first-hand experience, and here’s my advice to you.
A trusted realtor will be ready to answer all the questions you have in mind about buying a new home. He/she will run you through the entire house-buying process as smoothly as possible. A reliable realtor will want you to find a great home that you love to live in. A genuine realtor will want you to feel educated about the whole home-buying journey, because he/she knows he/she is getting paid for his/her invaluable expertise, and by letting you down, he/she is ultimately letting down his/her profession.
So, find a realtor who understands what you need and helps you find just that. And on your way to finding a good home for yourself, don’t hesitate to ask questions, no matter how silly they sound. If you have the right realtor by your side, it will just make things easier for you!