Where to Start: Tips for First Time Home Buyers

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Buying your first home is scary. Working in real estate, we see a lot of people who are first time home buyers and typically have a lot of uncertainties, doubts, and questions. Rightfully so! Buying a home is complicated enough but when you’ve never done it before, it’s even more intimidating. We’re here to give you some pointers!

1. Are you financially ready to buy a home?

Here in Oklahoma, we are lucky that our cost of living is so affordable. Forbes rated Oklahoma City as the #1 most affordable city to live in for 2010. Having said that, though, there are a lot of payments relevant to home ownership that you would not encounter as a renter. This may include additional utilities such as garbage pick-up and water. You will need to pay property taxes as well as insurance. Before you buy, it’s helpful to clear up any debts that you have and build up an emergency fund just in case.

2. Go shopping!

Loan shopping, that is. It’s still too soon to go shopping for houses! Go to a lender or two…or five. Get pre-approved by giving a lender some brief information about your employment and any debts you may be carrying. They will crunch some numbers and get an idea of how much you can afford. Remember that this is the absolute most you can afford, not what you should buy!

3. Start planning

Budget, budget, budget!! When you talk with a lender, don’t be afraid to ask questions. Ask them what current interest rates are and what loan option will be the best for you. This is their job and they know how to help you figure out which payment plan will be best for you. You may also consider increasing your down payment amount. This may drastically change the amount that you pay! Maybe you want to wait to buy and save up a hefty down payment to build immediate equity. A good illustration of this can be found here.

5. Find a Realtor

A good Realtor, like the ones on our team, can help you find areas with great value that meet your requirements such as a certain number of bedrooms or to advise you on neighborhood safety or school ratings. Express to them what is important to you and it will become important to them as well. Realtors are here to represent you and your best interests, always.

6. Be Realistic

While you may get approved for a higher loan amount than you thought, this doesn’t mean you should go for that maximum home price. A good rule of thumb is to keep your entire home payment (including your mortgage, taxes, and insurance) between 25% and 30% of your income.  Some people will even give you the rule that your home should be no more than two and a half times your annual salary. If you get caught with a mortgage payment that is beyond what you can afford, you won’t be able to enjoy life in your home! Give yourself some allowance in your budget to meet your daily obligations and save for things you need.

7. For Your Protection, Get a Home Inspection!

This is one of our favorite sayings! Once you and your Realtor have found your dream home and you’ve submitted your offer on it, we always recommend that you have a home inspection done on your home. You will need to pay for this, but a thorough home inspection will teach you about the home and will give you a heads up and make you aware of any issues the home may have, such as foundation issues. Additionally, with this professional proof of any defects, a lower price may be negotiated. Or, if you really want to, you can change your mind altogether. You may be out the cost of the inspection, but that’s a whole lot cheaper than buying a home you aren’t satisfied with or that costs you more in repairs than you can afford.

8. Closing Time

Once the offer is accepted, the home will go into escrow meaning that you are almost finished! The escrow processors will gather all the necessary paperwork from both parties Realtors, lenders, etc. to get everything legally and financially ready for close. Then the big day comes when you sign the closing papers, get your key, and move in!

Confused? There’s no such thing as a stupid question, especially when it’s a question about something as serious as home ownership. We’d like to make everything clear to you, we will promptly return your email if you would like some advice on buying your first home!

Anya Taschereau
The Allen Group

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