Beginning your house hunt can sound like a daunting task. All the financial paperwork and the actual search can feel overwhelmingly stressful. Luckily, we are brand new first time home buyers and loaded with our 6 best lessons we learned. Take a breath and read on for a stress-free house hunt!
1. Get pre-qualified.
In my opinion, this may be the most important piece of advice on this list. Getting pre-qualified means having a mortgage company review your financial situation to determine what home price you can afford before you make an offer on a house. You don’t technically have to be pre-qualified before you make an offer. However, being pre-qualified will make your offer much more attractive to sellers because it lessens their risk. For example, if you make an offer on a home without being pre-qualified and the seller accepts your offer the home goes on deposit. If the mortgage company then determines you cannot afford your offer the home goes back on the market and the seller starts again (other offers can be made on a home while it is on deposit in case one falls through).
Back to you as the buyer though – why get your heart set on a home only to find out it is out of your budget and you have to back out? Know your financial situation first and save yourself potential heartache but also make your offer even more attractive to a seller proving you can back up your offer. In competitive housing markets this can be HUGE. A home is most likely the biggest purchase you will ever make but could also really harm your financial future if you get in over your budget. Make the most knowledgeable choice.
2. But don’t take the mortgage lender’s maximum as your maximum.
When the maximum loan amount is calculated, the mortgage lender isn’t considering your lifestyle and everything you enjoy doing in the budget. They don’t care if you eat peanut butter and jelly for every meal for the next 30 years. We got that number but also calculated out what we were willing to pay each month towards housing. Guess what? We enjoy nice dinners occasionally and have hobbies we aren’t willing to give up (horseback riding ain’t cheap and neither is building computers). Our maximum was much lower than what we qualified for. We did not want to sacrifice every penny we made to put into paying for this house. It is much easier said than done to change a lifestyle you are used to.
3. Do your homework for government programs.
There are so many programs for tax incentives, special mortgages, and more you may have never heard of before for reasons such as:
- First time home buyers
- Firefighters, police officers, EMTs, teachers (Good Neighbor Next Door programs)
- American Indian and Alaska Natives
- Buying in a revitalization area
- Buying a home that needs significant improvements
Look at this research like a scholarship, if you don’t do the research and apply you won’t get it. These vary by each state and may have income limits (if you make too much you may not qualify) but it can never hurt to check.
Click here to check what programs your state offers.
4. Have a good idea of your needs and wishes before you start with a realtor.
We studied the market for what felt like forever before we officially started our house hunt with a realtor. Of course, once we started our opinions did change slightly and she made some great points of things we didn’t think of before but generally we knew what we were looking for. This saved everyone time by not seeing a million houses and gave us the ability to jump on our house when we saw it fit all our criteria (and even all the wishes!) Here were some of ours:
- 3 bedrooms
- 1.5 baths
- Double wide driveway and/or two car garage
- Extra living space (finished basement, family room, office, something other than just one living room)
- Ample closet space (our apartment was an older home with ZERO storage space that drove me insane)
- We knew what town we wanted and even our top choice neighborhoods as well as neighborhoods we would not consider
- Central air
- Gas heat
- Walk in closets
- 2.5 baths
- Fenced Yard
- Mud room
- Sun room
My view with the wish list was it would be nice to have a couple of these items, we knew we found our house when it had ALL of them (but needed some work of course, nothing is perfect!)
5. Consider future resale value.
I know this might sound crazy and you’re thinking “I haven’t even BOUGHT the house, why think about what I could sell it for?!” Hear me out. Early on we toured a house in the PERFECT neighborhood with the PERFECT design and space. It even had the most charming stream running through the backyard behind the patio. I could practically see myself drinking my coffee in this heavenly patio of gardens and water sounds. It seemed too good to be true that it was in our price range and we were told the sellers were super negotiable.
Life Tip: If something sounds too good to be true, it probably is.
That storybook stream in the back? Turns out the house is in FEMA’s highest rated flood zone and the flood zone territory literally covered only that house in the neighborhood. I called for a quote on flood insurance and the associate actually apologized before giving the rate. It was through the roof. The thing is though, even with the flood insurance premium since the price was so comfortable it wouldn’t have actually been over our monthly budget. However, all that money we would pay yearly would never go to equity or anything useful like the rest of the mortgage would. Needless to say, that house has been on the market for a very long time. I actually feel pretty bad for the current homeowners being unable to sell it, but always protect yourself. Is the house an unusual design that may not be popular? Is there an unusual customization the owners made? Could this deter future buyers?
At the end of the day, a home is a financial investment. You wouldn’t buy stock in a company with a bad record just because it’s a good price, don’t get stuck with a house that may be hard to sell.
6. Don’t get pushed around in negotiations.
Buying a home can be a really emotional process. You search and search and finally you walk into one that you fall in love with. You can see yourself there. It already feels like your own. Unfortunately, the last people just walked out saying the same thing. Negotiating can be brutal and many different situations can arise. There can be a bidding war with multiple buyers making offers, the sellers can come back with a counter, you may even do the inspection and find issues that you go back to the seller with.
We put an offer in on one house that was absolutely beautiful. Unlike the one we have now it was completely redone by a professional flipper so the seller was pure business. We made our first offer, he came back only slightly lower than asking, back and forth until our final offer he countered $2,000 more. We declined. Some people thought we were insane not meeting him since we were only $2,000 away. However, adding up the counters we were actually way over the offer we were comfortable with and too close to the maximum we preferred to stay far from. There was definitely some pressure that we were making the wrong choice backing out and were told “It’s only $2,000, over a 30 year mortgage that’s nothing.” You have to stand strong, you are the one paying the bill. To some people that extra difference sounds like nothing but to us the large amount over our offer made us weary and question what we were getting into.
A house is a house. I am confident that what is meant to be will be. For us, fate happened to work out just a short time later and we found the house we love (more here) and jumped in confidently.