So, you’ve decided to take the plunge and buy a home? If you’re a first-time homebuyer, the process can feel daunting. Many mistakes can be avoided by being prepared, informed, and working with an experienced agent. Here are a few fundamental tips on making the home buying process more manageable in a highly competitive market.
Educate yourself: Since this may be the largest financial transaction of your life, ask questions, and educate yourself along the way. It’s good to take the time to clarify your priority list, have a grasp of what it takes to enter this highly competitive market and to know what you can afford.
Choose the right Realtor: Buying a home can be an emotional journey; we are knowledgeable and can set expectations for you, especially in this low supply and high demand market. With the proper guidance in navigating a seller’s market, you are much more likely to land the home you are looking for.
Shop for lenders: Shop for lenders who are knowledgeable of first-time homebuying programs. Not all lenders are familiar with first-time homebuyer loan options. One important note here: These programs, particularly those with down payment assistance, can have extra costs favorable to the lender. Be sure to ask questions. If you are not sure what to ask, we can help here as well.
Get lender pre-approval: Avoid looking at homes you can’t afford by knowing how much home you can afford before your home search begins. In this extremely competitive market, you’ll be able to act fast to make an offer on a home you love.
Consider current and future lifestyle goals: Ask yourself where you are at your stage in life, how long you plan to stay in the house, what’s important to you, and why. Buying a home is a big purchase, and there are many things to consider that will ultimately affect your quality of life. Having a realtor who is willing to place your needs over their commission can be critical in this emotional process.
Assume you need 20% down: First-time homebuyers often believe they don’t qualify for grants or low-down-payment loan programs. Each state (Consider finding a CA link here) has a housing authority that can provide resources on first-time homebuyer loan programs and participating lenders to contact in your area to discuss your options. Your lender should be aware of these programs and can walk you through other options as well. But again, be sure to clarify any additional cost so that you can weigh them against the benefits.
Try to buy your forever home: Don’t try to buy the Taj Mahal for your first home. Maybe you’ll live in it for a while, and if your life circumstances change, the home could be your first rental property at a 3% interest rate.
Take a crowd to the home inspection: Bringing friends and relatives to the home inspection is distracting for the home inspector and you. It is hard to focus on what the inspector has to say about the house with a crowd there. Our experience is that the best home inspectors are good educators as well. But if you are not of the “handy” ilk, it may help bring someone along who can ask some of the critical questions.
Miss an opportunity: This is not your parent’s housing market. Buyers have to be ready to write a contract when they see a house they like, and often there is no time to bring mom and dad back to see it later. Some of our first-time homebuyers say they’ve read they should look at 10 to 15 homes before making a decision. Not only is this a seller’s market but now with COVID restrictions in place previewing homes is more complicated. (Remember, open houses are out for the foreseeable future.) Do as much homework as possible before you preview a home as it may not be available for very long.
In other words, be prepared, know what you want, don’t overcomplicate the process out of fear, and be ready to make an offer if it’s the right house.