We got married two years back and now are tired of spending $1500 a month on rent. A dinner invitation at a friend’s place who recently bought a home made us start thinking about. "He is building equity" and "we are not". Yes, that’s absolutely right. We are putting $18000 per year. YOU HEARD IT RIGHT ($18000/YR) we both looked at each other and yes. We were ready to buy or at least consider it.
Needless to mention that next morning we started searching for "First Time Home Buyer tips". There was a wealth of information available online almost intimidating but the things that really matter were not described anywhere. Here I would like to capture a few of the things which we thought were the most important but weren’t communicated to us early on.
- Of course everybody tells you that you need to know your budget, consult a lender et what we aren’t told is that the total cost of home ownership can be different. You need to be completely aware of what your combined household income is and what your total cost of ownership would be on a monthly basis which includes smallest costs (monthly HOA, lawn care, increased utility, projected repairs et). If your agent is informed, he will help you guide through these in a spreadsheet type format so you r not caught unaware.
- Well defined criteria. some of the most obvious requirements include: #beds, #baths, single story, two story, location (suburbs or downtown). Some of the less obvious criteria is…do I really need to stay in an excellent school district and pay higher property taxes if I don’t have kids or none planned for a while assuming that you plan for a family in one year even then you are six years away from sending your kid to elementary. Is it worth paying extra taxes for 6 years or more have your real estate agent run some numbers for you. So can make an informed decision.
- Exit Strategy: Another example of less obvious criteria. Are you considering some positions within your organization which might require you move in 3-4 years? Would you want to be able to move this home quickly if you decided to move consider the ADOM (Average Days on Market) for different areas if this is your case for both selling and leasing markets you don’t want to invest somewhere where availability is high and lots of homes are sitting on market for longer time.
- Invest time: Home buying is a time consuming process. You need to be mentally prepared to spend time and energy into this effort but having a clear criteria definitely helps you in shortlisting faster make sure to understand key terms and seek help from your hired agent pre-approval, conditional approval, option check, earnest check, appraisal, survey, clear to close, HUD, closing statement, homesteads, tax incentives, points, contingencies.closing costs. It’s best to have your agent provide you with a Home Buying 101 class way early into your search et.