First-time home buyers and expenses
Because of their inexperience, first-time home buyers may make unfortunate mistakes when shopping for a house and find themselves spending more than necessary as a result. For example, many new home buyers, accustomed to renting, may not understand the benefits of a buyer's agent. If they rely on the seller's agent or do not select their own carefully, this can decrease their chances of getting the home they want at a price they can afford.
According to SmartMoney, it is best to look for an agent who has experience helping first-time home buyers through the process of searching for and purchasing the home they want. This is only one common error, however, and there are others home shoppers should look out for.
Determining price range
Investopedia cites knowing their price range as one of the most important steps home buyers should take in advance. Home buyers should establish a budget taking into account monthly expenses such as vehicle or transportation expenses, food, student or other loan payments, credit card bills, insurance premiums and anything else. The money going toward rent should be factored into those calculations, and affordable monthly payments should be determined.
According to SmartMoney, it is common for buyers to become so focused on comparing floor plans, square footage, backyard space and other aspects of homes that they forget to determine their price range and financing options. figuring out what is reasonable first can narrow the search significantly and simplify the process.
The price of success
Another difficulty for inexperienced home buyers is anticipating homeowner expenses, according to Investopedia. Owning the property means higher maintenance costs that renters do not have to pay, as well as property taxes. Insurance, membership in a homeowners' or neighborhood association and other factors can contribute to the regular spending needed just to maintain ownership.
The age of a home will affect the need for repairs and the cost of upkeep.
Sometimes, first-time home buyers compensate for the expense of home purchase and ownership by giving in on something important, like settling for fewer bedrooms than the family needs.
On the other hand, SmartMoney notes, home buyers may also compensate by becoming overly ambitious, purchasing a home whose total cost over time, including maintenance and other expenses after the purchase, becomes a financial burden. Because of this, the inexperienced in particular may find expert advice beneficial in helping them establish and stay within their price range.
COLDWELL BANKER SHARES THE MOST IMPORTANT things to consider when buying a home with family in mind
For many people, finding a new home is more than a matter of personal taste and individual finance — it's a family affair. Buying a new home to accommodate a growing family is an exciting step in one's life, but it can also be a balancing act. Communication and planning are key to any successful home-buying experience. Moving to a new home while expecting a child or preparing for a family down the road makes anticipating your future needs all the more important. What may make a perfect starter home for a couple might not work as well when children come into the picture.
A recent survey released by Coldwell Banker Real Estate LLC found that 65 percent of homeowners who are also parents purchased their first home before becoming pregnant or within one year of their child's birth. For those consumers who are in a similar position, Coldwell Banker Real Estate LLC offers the following five factors to consider when buying a home with family in mind:
- Proximity to family. Nearly half of the homeowner respondents in a recent survey from Coldwell Banker Real Estate LLC reported that they live less than 10 minutes from extended family members, with 72 percent choosing to live within 30 minutes. Buying a home that is close to family members can provide support, help and guidance that can be a great benefit both emotionally and financially. With extended family nearby, families have the opportunity to spend more time together and even save money on occasion. The cost of babysitters and long distance travel to visit relatives can really add up!
- Existing floor plan. Each family has its own unique dynamic and should take its distinctive needs into consideration when exploring different floor plans. While having a master bedroom upstairs and the other rooms downstairs may work for some families, others may prefer to have all of the bedrooms on the same level.
- Surrounding neighborhood. The neighborhood looks different from the eyes of a parent. It's wise to get an idea of what the neighborhood offers for children, such as local recreational centers, parks or playgrounds as well as the school system, before deciding on an area to live. Coldwell Banker Real Estate LLC recommends home buyers utilize online tools such as Coldwell Banker On Location that can offer consumers a wealth of local market information.
- Future lifestyle needs. They say children grow up in the blink of an eye. Make sure the home you purchase leaves growing room and will still fit your family's needs a few years down the road, especially if there are plans for more children.
- Budget. One of the most important things for all potential homeowners to consider is their personal budget. Growing a family and having children usually means a growing list of expenses as well. Estimate monthly expenses along with a mortgage payment to ensure all financial commitments can be reasonably met.
Dreaming of owning your first home?
Tired of shoveling out rent for a home or apartment that doesn't feel like yours? Take heart, changing from renter to homeowner may be easier than you think. We're here to help.
Where do you start?
First of all, learn the financing basics. Get pre-approved and become a smart shopper.
When you buy your first home, making monthly payments probably won't be a problem. After all, you're already paying rent to your landlord each month. It's coming up with the lump sum needed for a down-payment that may seem impossible. Fortunately, there are options to make buying your first home a happy reality.
Programs for first-time buyers. There are several local or federal government programs that help first time buyers get into the housing market. Ask us about these options.
Your lender. Your bank or credit union may help as well. Are you debt free and own something free and clear, like a car? Your lender may lend you the down-payment by securing it against this asset.
Private contracts. Look for a seller to help you buy and finance your home. Some sellers are willing to carry the contract themselves and will waive the down payment. You may only have to pay the monthly mortgage installments.
Need financial solutions?
Credit or tax problems. Do you have problems with your credit rating or owe money in taxes? Buying your first home is still a possibility. Check with your lending institution about options, such as paying a higher down- payment.
If necessary, contact a financial advisor or tax resolution service.