There are many things you should do as a first time home buyer. I decided to ask first time homeowners what they would recommend first time home buyers to do. After talking to many first time home buyers, these are the things they would advise: check the safety of the neighborhood you want to live in, determine how much you are willing to tolerate driving and traffic each day, ensure you are buying a safe house with minimal to no repairs, figure out what you will be comfortable paying each month, ask yourself why you are buying a home, expand your choices with new construction and resales, make sure you don’t overbuy or underbuy, and don’t overlook homes that need some work.
Many first time home buyers choose to go see a house based on the photos that they’ve seen online, but buying a first home requires much upfront work on your end before you even go look at the property.
Safety of the Neighborhood
You’re going to be taking walks around the area or your kids are going to be playing outside so you need to make sure the neighborhood is safe. Look for an area where people are friendly and are proud to live in the area.
You might expect the neighbors to be caring and watch out for each other’s well-being or even watch your house when you are on vacation.
Some people view Homeowner Association (HOA) as a restriction on what they can and can’t do, but having a neighborhood organization ensures the quality of the development.
You should stay away from neighborhoods that have garbage everywhere, graffiti, or homeowners who don’t care about maintaining their lawns or houses.
Look for signs of high crime rates. All of these clues should have you questioning if you’d want to live in that neighborhood or not.
Think About Commute Time
I think one of the most important factors for a buyer to buy a home is being close to work. Because we drive to work, driving hours each day sitting in traffic is not very enjoyable. A good place to start is by figuring out how far you are willing to drive each day for work. Is it 15, 20, 30 minutes each day?
If you work in the city, keep in mind the further you drive the more affordable houses are. After you’ve found the neighborhoods you’d love to live in, drive there one day from work and just to see how the traffic is to see how long it would take to get home.
Figure Out Your Comfortable Monthly Payment
Start with the big picture and look at the median price of each neighborhood you want to live in. The one thing you don’t want to do as a first-time home buyer is buying a house that is more than what you can afford. Look at the median price and figure out what it costs to live in that neighborhood with those amenities such as schools, restaurants, and local shopping areas.
Look at New Construction and Resales to Widen Your Selection
Newly constructed homes are houses that are brand new; resales are homes that has had more than one owner. Newly constructed homes offer the newest features such as appliances, hardwood floors, and quartz countertops but command higher prices. But sometimes higher prices will mean less repairs in the future. Resales can offer affordable homes in great neighborhoods. With some resales, the homeowners really love their home, and they really keep up with the maintenance so you can find great quality homes.
Looking at Why You are Buying a Home
Buying a home because your friends are doing it or people are telling you to buy a home is not a good idea. Buying a home because you want to start a family or want something to call yours in the future is a better reason. People buy homes because they need a bigger space, more privacy, a place for family and friend gatherings, a better neighborhood or a better school district. Also if you are renting it’s important to know the advantages and disadvantage of renting and owning a home. So it’s important to know why you are about to make the biggest purchase of your life.
Make Sure You Don’t Overbuy or Underbuy
Overbuying is buying 4,500 square foot home when you only need 2,500 square foot and it can cost thousands of dollars per month in heating costs and maintenance costs.
Underbuying can be dangerous as well. Let’s say you bought a 2 bedroom and 1 bath home but a few years down the road you decide to have a family and the space now feels too small. At the time it was a good idea because the monthly mortgage was low, but now you’ll have to list the house to sell and look for a different house. The idea is to look for a house that fits your family’s needs for the next few years but to not overbuy and overspend.
Don’t Overlook Homes That Need Some Work to be Done
The one thing that you can’t change is the layout of the home, but anything other than that can be upgraded for a price. In certain areas, newly constructed homes might be out of your budget. A resale that requires some work scares most first time buyers, however, it might be your opportunity to make some equity. The resale could fit your monthly budget and build some equity for a few years and moving up later becomes easier.
Days on the market can tell you good or bad things about the property. The homes that have been on the market for a long time could just mean they have bad photos online and other buyers have skipped over them and not decide to see the home in person. It might be an opportunity for you to buy. Go see the home in person to figure out what is really wrong with the house and why it’s been sitting on the market for a long time.
How to Qualify as a First Time Home Buyer?
According to Housing Urban Development, FHA home buyers need a credit of 580 to be eligible for the program of 3.5% down. The borrowers must meet the debt ratio requirement of 45-50%.
What is the Definition of a First Time Home Buyer?
- a first time home buyer is someone who has had no ownership in a residence in the last 3 years.
- a single parent who has only owned with a former spouse while married, an individual who is a displaced homemaker and has only owned with a spouse,
- an individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations,
- an individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
Can I Be a First Time Home Buyer Again?
Yes. If in the last 3 years you have not owned a home leading up to your purchase then you can qualify as a first time home buyer.