1. Get pre-qualified. Before you even begin shopping for houses, speak to your lender and get pre-qualified for a mortgage. There are a lot of sound reasons for starting with your lender. Knowing what you can afford will save you from looking at houses outside of your price range, saving you the frustration of falling in love with a house only to find out you can’t afford it.
Being pre-qualified can also give you an advantage in a competitive situation where your offer is one of several. All things being equal, sellers will often go with the offer from a buyer who has already qualified for the mortgage.
2. Budget for more than your down payment. This is a mistake we see quite often. There are more expenses when you buy a house than your down payment. You’ll have a number of closing costs, including an appraisal, an inspection, and a title search. You’ll need homeowner’s insurance. You’ll likely have moving expenses.
3. Don’t fall in love until after you close. This is a hard one. Buying a house is an emotional process. But it’s a complex process with a lot of twists and turns. Investing too much emotionally while negotiations are still on-going is a good way to make a financial mistake. You have to be prepared to walk away from any deal that doesn’t make sense for you financially. Even in a hot market, there are always other houses out there.
4. Don’t just look at the living spaces. It’s important to study the bones of any house you are considering. Look at the foundation for cracks or other flaws. Look for high and low spots in the floor. Look in the attic to see if the rafters are well braced. Ask about the wiring, especially in an old house. Look at the roof for damage. While you’ll spend most of your time in the living spaces, it’s these underlying fundamentals that can be expensive to repair. Be sure that any inspection you have on the house details these fundamentals as well.
To help you better understand the entire home-buying process, we’ve put together an e-book — Tips From a Lender: A Homebuyer's Guide. It’s a great resource for anyone in the market, but especially for first-time home buyers. You can get your own copy here.
Of course, the best way to answer any questions you have about your specific situation is to speak with a mortgage specialist.