Buying your first house is right up there with many of the milestones of American life: buying your first car, choosing a college, getting married, and having a baby.
All require (or should require) a considerable amount of thought to get it right. First time home buyers often spend a lot of time researching their purchase and educating themselves on the local real estate market, yet mistakes are still made.
Hindsight may be 20/20, but here are some things many homeowners wish they had done before they jumped into their first mortgage:
Started Saving For a Down Payment – Earlier
Basically, the earlier you start saving for that down payment, the better. If you want to avoid paying private mortgage insurance, you’ll likely need a minimum of 20 percent of your future home’s value for a down payment, and on a $200,000 home, that’s $40,000. Even if you aren’t planning to buy any time soon, you’ll put yourself in a much better position if you start stashing $50 or $100 a month away now.
Fallen in Love Too Soon
Like getting married and having a baby, buying a home just isn’t something you should rush into. There are lots of things to consider when purchasing a home, and you can often benefit by looking in different areas and neighborhoods before you make your decision, which takes time and patience.
Built an Emergency Fund
As many first time home buyers find out, buying a home isn’t just “buying the house.” There will be all sorts of new expenses appearing in the monthly budget that you may or may not have had when you rented, such as:
To be as prepared as possible, start building your emergency fund for several months, or years, before you actually take the plunge into home ownership.
Shopped Around More for Their Mortgage
The best way to get a good mortgage rate is simply to shop around. Don’t think your best option is necessarily your current bank; there are many choices. You’ll likely be surprised at the variety of rates that you will find. Saving even half a percentage point may shave thousands of dollars off the price of your home in the long run.
Tried to Make Too Many Changes, All at Once
No home is perfect, and there will be some things you can live with and others you can’t, as well as some things you can change, and others that are there for the duration. For instance, you can’t change the location of a home, so remember that you’re not just buying the house, you’re buying the neighborhood – remember the old saying, “you don’t just marry the person, you marry their whole family?” It applies when buying a home, too.
Always explore the surrounding area before you commit, even if you think it’s just your “starter home.” The problem is, not many young families can afford their “forever home” right away, or for many years, because even as home prices and debt loans have risen, paychecks haven’t increased at close to the same rate.
At O’Keeffe O’Brien Lyson Attorneys, we have significant experience navigating a vast array of real estate transactions. Speak to attorney Dean Rindy today for help reviewing your real estate transaction by calling 701-235-8000 or 877-235-8002.