Don’t let people scare you. Home ownership is awesome!
Truly, there is nothing better than coming home to YOUR house, grilling burgers on YOUR deck, picking flowers from YOUR bushes, and knowing that you are building a lasting investment. Sure, there is added responsibility, but you can take steps to ensure that you are prepared for all home ownership brings.
I am sharing with you some lessons we learned along our journey of buying our first home. This is not an all-inclusive guide, but I hope it helps prevent a few avoidable mistakes. I encourage you to talk with a few mortgage lenders, attend a home-buying seminar, and do your research! There is no reason your first home purchase can’t be relatively easy and pain free.
1. Know your market… and don’t trust the pictures.
Will and I were home-shopping in Findlay, Ohio while living in Dayton. We knew little about the town and nothing about the surrounding neighborhoods of our Zillow® searches. Nonetheless, we picked out four adorable houses and made the drive to Findlay to meet with our Realtor® to see them. I was a ball of nerves and excitement the whole drive.
My stomach sank as we pulled up to the first house. Bad neighborhood.
The five other “For Sale” signs in front of neighboring houses only reiterated the idea that people were trying to get out of there. I was so confused. The pictures of the house online were so cute! Even the lawn looked spacious in the photos. In reality, it was a crowded little lot and fairly run-down house, masked by cleverly angled photos and filters. Repeat this story three more times. We drove back to Dayton discouraged.
Here is the real bad news: we based our home budget on these houses.
By the pictures, we thought that we could get a beautiful home for an unrealistically low price, and we built our down payment plan on those prices. When we actually visited houses in that price range, we knew they would not be appreciating assets nor bring us fulfillment by living there. So, we decided to increase our budget.
I encourage out-of-town shoppers to take an extended trip to your new town. Get a feel for which neighborhoods you like and find out what areas are best to avoid. The last thing you want is to fall in love with a photo only to be disappointed by the reality.
(Note: increasing your mental budget does NOT mean buying above your means. Buying only what you can afford is crucial to your success and long term happiness!)
2. Shop for a Realtor®, not just a house.
My only regret with our Realtor® was not finding her sooner. I spent a lot of time researching local Realtors® and tried to find one that had experience, award winning service, positive ratings, and most importantly, seemed friendly. Buying your first house is intimidating enough; find a Realtor® who will add comfort.
What you shouldn’t do is hire a Realtor® because he is your best friend’s brother and you feel obligated to give him your business.
This isn’t like doing a friend a favor by buying her kid’s Girl Scout Cookies®. This is a major investment, and you owe it to yourself to have an experienced professional watching out for you.
3. Ask a lot of questions.
Think of how many questions a 4-year-old asks in one day. You should be asking even more.
Your mortgage servicing team, your Realtor®, your home inspector, and others are all resources for you to use. Do not let any question go unasked.
We explained to our Realtor® and home inspector that we were first time home buyers and would appreciate if they walked us through everything slowly to ensure we understood each step. Most professionals want to provide you with great service and are happy to give you more information! Be honest and upfront about what you do and don’t know.
4. Confirm what stays and goes.
This ties in with my last point. Over-communication is key. Don’t assume anything.
Generally, a home’s fixtures remain in place for the buyer. That means items that are attached to the wall via studs (not simple wall hangings) or bolted to the ground should remain in the home. There are a lot of official and unofficial rules to follow here.
Since some of the rules are gray, ask your Realtor® to contact the current owners to confirm what they plan to leave behind. Curtain rods, blinds, built-in furniture and shelving, concreted basketball hoops, medicine cabinets, plants, and decks are items that the buyer should ensure stay with the house unless otherwise agreed upon. When you finally get the keys to your new home, you don’t want your joy hindered by any unfortunate surprises. Ask ahead of time.
5. Budget extra for home furnishings… and then budget a little more.
No matter how much you tell yourself you won’t need much to decorate or furnish the new house, assume that you will get caught up in the euphoria.
As sure as the sun rises in the east, you are sure to make unexpected purchases. If you came from an apartment like us, you probably won’t have basic things a homeowner needs like a ladder, a hose, a lawn mower, deck furniture, a bucket…. yes, a bucket. It never crossed my mind as something I must own, but trust me, it’s a thing a homeowner needs!
Make a budget for a list of realistic purchases beforehand. The key is to not put all your liquid assets into the down payment. You will need some extra cash later!
6. Be sure your down payment is liquid and ready in advance.
We did not have trouble getting approved for a loan. This is partly due to good credit, but also due to the fact we easily proved we had a liquid and available down payment. We had an investment account earmarked for our home purchase. We liquidated and transferred it into our checking account a couple of months before the mortgage approval process.
Many people do not know this, but if you make large bank deposits during the mortgage application process, you must prove that it was not an additional loan from anyone else. Save yourself the hassle and keep plenty of cash at your bank for the down payment rather than try to shift funds last minute.
You may read all of this and think, “This will never apply to me. There is no way I can save enough for a down payment.”
But, like anything of value, your home is worth waiting and planning for.
Four years before we bought our first home, Will and I opened an investment account. We started by just sending $50 per month to it automatically. We slowly increased our deposits and started sending the money weekly. Trust me when I say that those four years of saving blasted by. It might take you 2 years, 5 years, 10…. but you will get there. Those years will pass by if you are saving or not.
Start today; you will not regret it!
I understand that it is hard to set savings priorities when you have school loans, a car on its last leg, and other surprise expenses. I encourage you to sit down with someone you trust and put together a plan. I am happy to offer you my thoughts, too! Future you will be so happy you started your plan today.