Buying your first home is equal-parts exciting, challenging and overwhelming. It’s also one of the biggest financial investments you’ll ever make, so preparation is key. At Briggs Freeman Sotheby’s International Realty, our seasoned agents have helped many first-time buyers successfully navigate this complex process. Carefully considering these six questions — and discussing the answers with an agent — is a great way to kick off your homebuying journey.
1. What’s my budget?
Mortgage pre-qualification and pre-approval will help you establish a budget before you even start searching for homes — but when you do start looking, don’t put all your focus on the list price. Make sure you’ve considered whether or not you can comfortably afford the monthly mortgage payments, and confirm that you’ve set aside enough money to cover the down payment and closing costs (usually about 2 to 5 percent of the purchase price).
It’s also important to ask yourself how long you plan to live in this home. If you’re going to leverage the rising prices of homes in your area, you might be able to stretch your budget for a few years. But, if you’re settling in for the typical 30-year mortgage period, the math has to add up from the start.
2. How do I spot a good deal?
Once you’ve started house hunting and compiled a short list of properties, ask yourself which factors you value over others and, when you view a listing as a “good deal,” which of those factors is present. Better still, ask an experienced real estate agent with local market knowledge who has the industry tools to compare your short list of properties with other homes on the market.
Some benchmarks to measure against are: the prices of similar properties in the same neighborhood, the number of days on the market, and the potential resale value in five, ten or more years. Bear in mind that you’re going to experience an emotional response, whereas your agent will have a more rational, objective perspective. Let the numbers speak for themselves.
3. What is my dream house, anyway?
You may be looking for the perfect first home, or you might simply be jumping on an investment opportunity. Don’t start your search until you have a well-defined end goal. It’s easy to be seduced by a beautifully staged home with curb appeal — one that just “feels right” as soon as you walk through the door. But, many buyers discover an altogether different picture during the appraisal stage, once the mortgage application has been submitted. A professional appraiser hired by the mortgage lender will examine the essential structure, foundations, etc. and alert the lender to any red flags that could cause the loan to be withdrawn.
Once the home has been appraised, it’s important to ask yourself how much you’re willing and able to spend on upgrades and repairs, as well as factor in any codes or restrictions that could affect those plans. A useful benchmark is the 85 percent rule: If you’re happy with 85 percent of the home as is, you can change 10 percent over time and you can live without changing 5 percent, you should be on the right track.
4. Is this the right neighborhood for me?
You’re buying a home, but you’re living in a neighborhood. For many buyers, it’s the local schools, access to transportation, stores and restaurants, as well as proximity to friends and family, that dictate their early search criteria. Ask yourself what you’re looking for in your local area, and be honest about whether the house alone can compensate for a neighborhood that doesn’t meet all your criteria, or vice versa.
There are plenty of tools you can use — including public records — to dig deep into the profile of your neighborhood, from tax rates and HOA regulations to crime reports and median salaries. While these facts and figures give you a solid overview of the area, your agent can offer insight on this specific neighborhood that only comes from industry expertise. Such insight includes market trends, meaning your agent can help you spot up-and-coming neighborhoods that are likely to go up in price over the next few years.
5. Am I ready to buy?
Take the time to ask yourself whether you’re emotionally and financially ready to transition from renter to owner. Whether you’re moving to a new area or simply looking to buy in the same neighborhood where you’ve been renting, this is a decision that should not be taken lightly.
On the financial side, there are expenses that come with any move, such as haulage and temporary storage, as well as homeowner costs that you never had to worry about as a renter, like property taxes and large-scale repairs and renovations. And from an emotional standpoint, there is the challenge of moving to a new place, making friends with new neighbors and potentially adapting to new schools. Your agent is a great resource when it comes to preparing for the moving process and understanding what all it entails.
6. Does my agent feel like a partner?
Buying your first home is not only one of the most significant financial decisions of your life, but also can be one of the most mentally taxing. Unless you’re completely comfortable navigating paperwork, financials and contract negotiations, there’s a compelling argument for drawing on the skills of a professional. Using an agent allows you the freedom to focus on all the to-do list items that inevitably come with moving while a professional handles the nitty gritty.
Reaching out to friends and family for referrals is often a reliable way to find a trusted agent. You can also conduct an internet search to see agent profiles and view their licenses, certifications and reviews.