Many of us grow up with the same ideals. We have goals to graduate high school, then college, and move on to buying a house. Unfortunately, many of us don't realize that being a first-time homebuyer is daunting! Buyers must sync up paperwork, time, and effort for the process to work.
The home buying process also includes loans, banks, contracts, agreements, and a lot of behind-the-scenes work. Then there are the guys seen (i.e., home inspectors, plumbers, electricians, roofers, etc.). The parts that impact property owners must work together to make everything happen.
That can be very stressful!
Make the Process Less Stressful
According to the US Census Bureau, 48.6+ million Americans have a mortgage. More than 30% of all homebuyers in 2021 were first-time homebuyers. And 2% of those buyers wish they would have waited to buy their home.
Real estate is a tricky field, run by firms and corporates. That means the average person has little experience with estate matters beyond a residential home.
Navigating the paperwork and economics is challenging for a first-time homebuyer—but not to worry! There are plenty of tips and suggestions online. Considering some of those tips makes the entire process less stressful for you and your family.
We suggest the following Do's and Don'ts list for every first-time homebuyer.
First-Time Homebuyer Do's and Don'ts
The most important thing a first-time homebuyer can do when entering the real estate market is learn patience. On average, home buyers only spend eight weeks looking at homes before they buy one. This is not indicative of a fast-moving housing market, as much as it is indicative of pushy real estate maneuvers.
Additionally, the market changes quickly. There is no reason to buy a $300,000 with no amenities; six months later, the same buyer could have got a $350,000 home with all desired amenities. Don’t be afraid to wait—it might even be worth it.
Start Saving Early
Between 2020 and 2021, residential real estate prices increased by 8%. In dollars, this looks like a property sold for $680,000 in 2020 and $734,400 in 2021. What this means for the first-time homebuyer is needing months’ worth of additional money. Many first-time homebuyers stop being able to afford houses, depending on the market.
There’s no real way for economists to predict the housing market. That’s part of what makes waiting to buy a home a good idea. The best tip for any first-time homebuyer is to start saving early. Getting started early can avoid heartbreak if the prices rise further.
Pay a Bigger Down Payment
For those uninitiated into mortgages and real estate loans: pay a more significant down payment. There is no world in which paying a higher down payment does not better benefit the buyer. The higher the down payment, the lower the monthly payments, and the lower the principal rate on the house.
Additionally, down payments should be at least 20% of a principal home cost. It needs to be at least 20%, or the buyer must pay for private mortgage insurance. This ensures that the lender is protected even if you stop making payments.
Do Extensive Research
First-time homebuyers need to do research before committing to their first home. They should do research in as many areas of real estate as they can, especially:
- The types of houses they like (i.e., big back yard or two-story).
- The typical costs for a particular kind of home (i.e., state median costs).
- The possible issues with the house (i.e., broken air conditioner or leaks).
- The average prices of utilities for the area (i.e., sewage, water, or internet).
- The projected population growth for a location (i.e., suburb growing into a city).
- The surrounding community and amenities (i.e., LGBQ+ friendly or gyms).
- The general area of an ideal home (i.e., school zone or neighborhood).
Once the buyer is seriously interested in a home, they should consider researching the house. Prior owner history is usually available via property records. Depending on the state, buyers can also find disaster records this way.
Hire Professionals for Assessments and Paperwork
This is the most crucial part of the entire homebuyer experience; professionals are the fastest and most straightforward way to make the transitions for real estate. For example, lawyers and accountants are some lesser professionals people think of for home buying. However, lawyers are highly beneficial, as they can ensure any contracts are suitable for the buyer. At the same time, accountants can point out errors or mistakes as far as your money is concerned.
Don’t limit hiring professionals to just the suits. Hire a home inspector to assess every part of your potential home. Ensure that you have chosen the inspector and not the real estate company or agent—biased inspectors can cost first-time homebuyers more money. Additionally, do a license lookup if you decide to work with a non-chosen inspector. That will give the buyer a lot of information about whether they want to work with the inspector.
Utilize First-Time Programs
First-time homebuyers should never think they are going into the real estate market alone. Many national programs are in place for first-time buyers. For example, government programs can give veterans zero-down payment loans for houses. Or other programs, like the one that rolls your closing costs into the loan to pay for later.
At the same time, departments like the Federal Housing Administration have options to assist with down payment options. Some credit unions also offer programs for members that qualify. There are many avenues for help for a first-time homebuyer.
Buying a first home is a milestone that many people want in their lives. Unfortunately, the process is complex and highly stressful. However, it doesn’t need to be.
All first-time homebuyers should consider the above list of tips. Research for your local area, save early and take advantage of programs. Then when you find a house, get professional help, and pay a significant down payment. But most importantly, be patient. The first-time homebuyer looks at an average of nine homes before picking one.