Advice for First Generation Home Buyers
Some families have lived under the same roof for generation upon generation. Others have rented for as long as they can remember. If you’re looking to make the jump from a renting heritage to a homeowning future, it’s important that you take the time to “look before you leap.”
Here are a few tips and suggestions that first generation home buyers should be on the lookout for as they prepare to purchase a home.
Assess Your Finances First
While signing a lease may commit you to a year or two of payments, buying a home can lead to decades of financial commitments. As such, it’s essential that you make sure you understand what you can afford before you put in an offer on a property.
Begin by assessing your current financial situation. What is your income? What are your expenses? What expenses will be replaced (e.g. rent) by new homeownership costs like your mortgage and utilities? As you assess your income and expenses, create a basic budget so that you understand your current financial situation.
Gather Your Home-buying Tools
Next, take some time to gather a few helpful homebuying tools:
- Get free info from a real estate podcast
- Your personal and financial information gathered and on hand as you prepare to fill out copious documentation.
- A mortgage calculator to help you estimate payments and interest.
- A list of home buying terms to ensure that you understand everything as you go along.
- Preapproval for a mortgage from your bank.
If you gather these tools early on, it’ll help you avoid stressful situations further on in the home-buying process.
Build a Projected Homeowner’s Budget
Now, you may be thinking you already have a budget pulled together, and that’s true. However, it’s wise to sit down before you tour any houses and come up with a second “projected” budget. This one should be purely hypothetical.
Start by transferring any income and expenses from your primary budget that you know will continue in the future. For instance, things like receiving paychecks and buying groceries won’t go away once you move.
Now spend some time experimenting with your mortgage calculator in order to see what kind of mortgage you can actually afford in your current situation. This is an essential activity, as your preapproval numbers can be misleading because they don’t take into account your other living expenses.
Adjust things like the size of the mortgage, the length of the mortgage, the interest rate, and the potential taxes. Also, consider what size down payment and closing costs could be expected depending on the size and scope of your loan. Remember to hire your REALTOR as well (usually NO CHARGE), who can even help you pursue a private sale, which opens up its own can of worms and should be approached with extreme caution.
As you mess with the numbers, you’ll slowly come up with a rough idea of what you can afford. This is an important step, as it can save you from committing to more than you can handle over the long term. It also can help you assess what you really have available to spend on housing on a monthly basis. This can serve as a springboard to either adjust your spending to make room in an already tight budget or to start looking for a side hustle to bring in some steady cash in addition to your established income.
Craft a realistic budget for the home owning costs
Owning a home involves more than just paying a mortgage, taxes and insurance. There are monthly bills for heat and water, and unexpected maintenance like repairs and upkeep. Read this to give you an idea of home ownership costs.
Come Up With a Checklist
Alright, at this point you have your financial considerations in order and you’re ready to start looking at homes.
As you line up properties that you’d like to visit and prepare for the actual home-buying process, take some time to create a checklist of things that you want in your house. This can include both big items, like a large kitchen, and little items, such as an established garden. Organize these things in order of importance. Having a list of this nature can help you stay focused as you view homes and can guard you against making any unthought out emotional decisions.
Plan Your Move Before You Buy
Finally, take some time to plan your move. It’s easy to push moving plans off until you actually have a house to move into, but if you wait until the last minute, things can get very stressful. Instead, take some time to begin:
- Minimizing your possessions: What do you actually need and what can be donated, recycled, or thrown away?
- Coming up with a packing plan: Where will you get boxes? What will you pack together? What needs to be packed in moving containers designed for fragile items?
- Making a moving plan: How will you move your possessions? Will you have help? Do you need babysitters? Will you need to rent a truck, or hire movers?
If you plan out your move early on in the process, you’ll be thankful when the time actually comes to put the plan into action.
The Home, the Process, and the Experience for first generation home buyers
The process of becoming a homeowner doesn’t have to be stressful or overwhelming. Sure, it will feel like a lot at times, but that busyness doesn’t have to translate into anxiety and panic.
If you take the time to budget beforehand, get your homebuying tools in place, shop with a focus, and move with a purpose, you’ll be able to own the entire homeowning process from start to finish.
Additional resource include:
Mistakes First Generation Home Buyers should avoidOur Latest Web-Stories Never miss an episode of our real estate podcast. Install our FREE Podcast App available on iOS and Android. For your Apple Devices, click here to install our iOS App. For your Android Devices, click here to install our Android App. Check my videos on Youtube
Great article! I’m planning to buy my first house next month and doing the research now. I already looked through multiple home builders in my city and decided to go with Paradise Developments. So some of the steps are already done though I haven’t build a projected homeowner’s budget that you recommend. The idea to plan the move even before buying a house is also great. Thanks for sharing.