5 Things to Do Before Buying a Home
First-time homebuyers embody the excitement of achieving the ultimate American dream: home ownership. Today, with so much uncertainty in the current market and a strict lending climate, first-time buyers have shifted their focus from dream to deal.
"Today's market is complicated with so many nuances that vary depending on your specific location that's it's impossible to make broad statements," says Realtor and Property Virgins host Sandra Rinomato.
But no matter where you live, "if you're in the right financial and lifestyle situation, now is the right time to buy," she says. "If you're not in a rush, it's also a good time to wait."
Once you decide it's the right time to buy your first home, here are five things you must do:
#1: Accurately track your expenses
"Don't guess," Rinomato says. "Oftentimes, we underestimate how much we spend." To really understand the financial impact of owning a home, start by tracking exactly how much you spend each month on everything from groceries to entertainment. Write the numbers down in a journal or a spreadsheet.
"A good way to track your expenses is to pay for everything with cash," she suggests. "It will open your eyes and you'll be shocked at how much you spend each month."
#2: Set and adhere to a strict budget
Once you have a clear picture of what you're spending, create a realistic budget. Remember to factor in your monthly debts and leave room for savings. Expect to shell out at least 10 percent of the purchase price for a deposit and another 5 percent for closing costs. This budget will serve as your roadmap to finding a home you can reasonably afford.
#3: Find a good real estate agent
Interview several agents before choosing one. "Look at the bigwigs in the areas you want to buy," Rinomato suggests. "Chat them up at their open houses and see if you connect on some level."
"Your agent will get to know your deepest, darkest secrets," she adds. "If you feel like you have to hold back, then that is not the right person for you."
#4: Clearly define what you want and need in a home
No one ever really knows what kind of home they want when they start house hunting. If you're a first-time homebuyer, definitely create a wish list for your first outing. After touring a few homes, sit down and reanalyze your needs and wants. You'll find that you'll need to adjust your expectations based on what's available in your target neighborhoods in your price range.
"Lifestyle versus finances, location versus size of the house-- all these categories come into play," Rinomato says.
#5: Communicate your vision to your agent
After you narrow down your wish list, it's critical that you share this information with your agent. Otherwise, you can waste valuable time and energy looking at the wrong homes.
"Communication is key," Rinomato says. "It helps with future searches. You don't want to end up buying the wrong home."
