Questions for First Time Home Buyers
Many new buyers don’t know where to begin when considering buying a home for the first time. Our questions for first time home buyers will help you navigate the new terrain. As a new home buyer, deciding to purchase a home may be one of the biggest decisions that you’ve made in your life. It’s also one that is necessary to contemplate the pros and cons. If you are a first-time home buyer, you may not be aware of the potential stumbling blocks. No need to worry because that is where our team of Valdosta Realtors can help. Read through our list of questions and let us help you find your dream home.
How Much of a Home Can I Afford?
This first question requires you to do a bit of homework. You will want to look at your finances. This includes your income, debts, and monthly recurring expenses. List everything, such as credit cards, car loans, auto, medical and life insurance policies, electric and water bills, and other miscellaneous expenses, such as food, gas, childcare, child support, cell phone bills, recurring subscriptions like Amazon Prime, television, internet, Hulu, Netflix, Apple music. Yes, all of these are important to list. A great way to do this is to print out a couple of months’ bank statements. List everything that comes out monthly. In this new age of technology, it’s easy to forget the various subscription payments that are automatically deducted from a bank account monthly. It’s also a great time to take inventory to see if you need all the subscriptions. Setting a budget and sticking to it can make a huge difference.
Remember, when you are adding a house payment in, it can often bring in additional expenses, ones that are expected and unexpected. We will cover more on that below.
Have I Saved Enough for A Down Payment?
A down payment directly affects the amount you will have to borrow. If you can put a larger down payment towards the purchase, your monthly mortgage will be lower. If you’re able to put down at least 20%, then you will not be required to purchase private mortgage insurance (PMI). Some loans do not require a down payment, and some only require 3.5% down. A knowledgeable real estate agent will be able to give you options.
What Is the Cost of Property Tax?
With a little preparation, you can avoid being shocked by the cost of property taxes when you buy your first home. You will want to do research ahead of time, so there’s no surprise. It is always a good idea to be educated on the total cost and any foreseeable rate increases on property taxes.
Most lenders can roll the property taxes into your monthly mortgage. This will increase your monthly payment by a little but often makes it easier to pay your property taxes, instead of being billed at the end of the year with a large payment. Some lenders may require putting property taxes in your mortgage and others do not. Again, your REALTOR® can help you in calculating this based on the city and county you are buying a home.
What are the Estimated Closing Costs?
If you are a first time home buyer, you may ask, “What are closing costs?” Closing costs are fees that are paid at the close of the property. These may include loan origination fees, inspection, home warranty, lawyer fees, title search, and other fees. They can be 3 – 6% of the mortgage. You can request a loan estimate from your lender which itemizes the costs. Remember this is an estimate and you will not have the final until the underwriting process is complete. Closing costs are negotiable and are unique to each real estate transaction and the circumstances around it. Your REALTORâ will advise you on this matter.
Are There any Hidden Costs to Owning a Home?
When you rent, the landlord takes care of repairs and any maintenance that may be needed. As a homeowner, you will have the responsibility if anything breaks or needs maintenance. That is why we highly suggest getting a home inspection.
Additional items you may need to maintain a home are a lawn mower, weed eater, chemicals if you have a pool, tools for lawn maintenance, air filters, light bulbs, and possibly other miscellaneous items. Each home sale is unique and as a buyer, you may need to have your own or purchase certain appliances, such as a refrigerator or a washer and dryer, if they were not included in the sale of the home. If you are currently living in a smaller home or apartment, additional furniture may be needed.
Before you decide on a home, you will want to find out if the community has an HOA (homeowners association) fee or any other types of fees. If they do it is good to find out what services and expenses they cover with the HOA fees.
Do I need to Consider the Cost of Moving?
Yes, all the aforementioned items need to be considered, along with what it’s going to cost you to move your household items to your new home. This may be one cost that is not considered when new home buyers purchase their first home. It’s easy to get caught up in the excitement of finally fulfilling the dream of home ownership and forget the other costs related to buying a home and moving. Some expected costs are buying boxes, tape, packing material, renting a truck, hiring movers, or hiring a moving company, plus any other unexpected costs. Often the total for the actual move can be more than anticipated.
Is an Emergency Fund Needed?
The short answer is, yes, it is smart to allocate money to an emergency fund. As a new homeowner, as stated above, you may run into different things that may need to be repaired, replaced, or updated. If you are not prepared for these emergencies, it can leave you in a bind. Having a budget and setting aside some money each month for this fund helps to ease the pain when something unexpected happens.
Do I have rights as a buyer?
Yes, you do and it’s important to know them. The CFPB (Consumer Financial Protection Bureau) has a guide worth looking at. You can also talk to your REALTOR® about your loan options and recommended lenders. If you’re working with an established real estate company, they will have a group of trusted lenders that they can refer to you.
Do I need Insurance?
Besides possible PMI insurance, you will want to have homeowner’s insurance that will cover your property dwelling and the items in your home. A great insurance agent will explain the costs of insurance and make sure your property and belongings are suitably covered. If you do not currently have an insurance company, this is another question you can talk to your real estate agent about. Many have preferred vendors they work with and recommend.
There are many fine details on being a first time home buyer and the steps to buying a house.
There can be unexpected expenses, however being educated on the details of buying a home is of the utmost importance. Choose a local real estate company with a team of experienced agents to help you. You may even want to work with a buyers agent. A buyer’s agent works with buyers exclusively.
Still have concerns or questions? Reach out to us today. Call 229-262-1388