IP Buying your first home can be both an exciting and stressful time. The whole process can be complicated and be intimidating for the inexperienced buyer. From loans to complicated documents to hidden costs and more, you can quickly find yourself overwhelmed. Here are some tips for smart first-time home buyers that will reduce some of that anxiety.
So, you’re leaping. After living as a renter in the Big Apple for a decade or more, you’re in a position to buy a New York apartment ––– finally. You’ve sacrificed and saved your pennies for the past five years, so now it’s time to become a homeowner in New York City. No matter how much apartment you can afford or in which neighborhood you plan to live, heed these first-time buyer’s tips to ensure your initial home-buying experience goes off without a hitch.
Know what you want and need
Whether you’re looking for a fixer-upper townhouse in Brownstone Brooklyn, or a studio apartment in a walk-up building in West Harlem, focus your search as narrowly as possible and do it with a wish list in hand. Shopping aimlessly in a city of endless choices doesn’t work with designer clothing, let alone real estate –– an H&M budget won’t get you a suit from Prada, much in the same way a one-bedroom budget in Washington Heights won’t get you a sprawling two-bedroom in the West Village.
Based on the initial wish list you had made before you began shopping, you might not be able to afford Park Slope, even though you have your heart set on that neighborhood. Adjacent areas of Brooklyn, however, could offer more space and additional amenities and still be within your budget, so stay open-minded.
If you aren’t prepared to stray from your dream section of NYC, adjust your list and scratch off that extra bath, or the outdoor space, both of which add thousands of dollars to an asking price.
Planning & Saving
Don’t start thinking about who you are going to get a loan from 1 month before you think about starting the hunt. Start planning for your new home well before you even think about dialing an agent. A few things to consider are what you can realistically afford, where you want to live, and what other costs will be associated with your home, such as HOAs and city taxes.
A down payment for a home is commonly set to 20%, but you can now get a loan with much less. However, you should consider if a lower down payment is worth the additional costs you may have to pay such as for mortgage insurance. Many people don’t consider the fact that a 10% down payment on a 200,000-dollar home is 20,000 dollars. For many first-time home buyers, this is not a small amount, so start saving now!
You can get one free credit report every year from each of the three big credit reporting companies. This means that you can get three a year if you use one from each. Go to annualcreditreport.com for more information on this.
Remember, they are the only site that is authorized to do this. Your credit score will impact your ability to get a loan. Plan, and you won’t find yourself being denied every loan you apply for.
In addition to making sure your credit score is healthy, you should avoid making any big purchases during the time you are hunting for your first home. Any activity that involves an inquiry into your credit, such as buying a car or signing up for a credit card, can lead to a drop in your credit score.
Getting a loan isn’t the only time you will have to talk money during the process of buying a new home. There are plenty of additional costs that can sneak up on you if you are not careful. One such cost is paying a home inspector. If you are buying a home, you need to have an inspector’s assessment, especially if you are not buying new.
Realistically, don’t expect a used home to be without damage. Depending on how lucky you are, expect to spend at least a few hundred dollars in repairs on your new home.
Appliances are another cost many first-time buyers don’t consider. Will the home you are buying come with a refrigerator? How about a washer and dryer? If the answer is no, then its best to have a budget planned for such costs.
How long will you be living in your first home? Are you going to start a family and need more space? Is your employment situation secure? Has there been a yearly increase in crime or a decrease in property values? These are only some of the questions you should ask yourself before buying that perfect dream home. Carefully consider your plans and resale value of your home. Remember, a home is more than just a place to live, it is an investment.
An issue commonly faced in bigger cities is urban sprawl. If you are in a developing area, then that can be great for your home’s value, but you should consider how your daily commute and noise levels will be affected.
There is a lot of paper shuffling that goes on during the home buying process. If you are unsure of what documents will be needed, don’t be afraid to ask an expert. This will save you a lot of headaches. The last thing you want is to be digging around your office in the middle of the night because you forgot to send some important document.
Also, read any documents that are sent your way. First-time buyers can get excited about their new home and potentially miss something important in a contract.
Get pre-approved for a mortgage
Don’t waste your time, a seller’s time, or the time of the brokers involved in the sale by not getting pre-approved. Obtain a pre-approval letter before you begin searching for your next residence, ensuring that you’ll have the ability to make an offer should you stumble upon “the one.” Without pre-approval, agents and buyers won’t take you seriously, and they’ll move on to a buyer who has the necessary paperwork. Plus, you’ll know how much cash you qualify to borrow ahead of your search.
You should do a lot of research into your buyer’s agent. A good agent will have your back and doesn’t just see you as dollar signs. Remember, an agent is there to make the whole buying process easier. If you find that this isn’t the case, then get a new one, fast! A good agent will not only be extremely knowledgeable about their subject matter but will also have plenty of experience buying homes in the area you are interested in. They will many times have insights into things that you may not have thought of.
If you find a home that you love, make a reasonable offer. If the home is a good deal, then you can be sure you aren’t the only person who has come to this conclusion. Place a strong offer that you are comfortable with. You can leverage your agent’s expertise for this part. If you are buying in a neighborhood where homes historically sell very fast, then you may not have time to negotiate on minor details, such as changing out light bulbs.
However, if you are in a situation where negotiations are open, then don’t be afraid to take advantage of the opportunity. From real estate closing costs to repairs to even pest control subscriptions, you can find something that may help you sweeten the deal.