If you’ve bought a home in the past, I could almost guarantee that there’s something about that first experience that you would change. I hear it all the time! Most of the First Time Home Buyers that I work with feel overwhelmed with the process. There are tons of moving parts, with relentless streams of emails and correspondence happening. It’s enough to spoil it altogether. Here are some key takeaways that I wish I would have been aware of when Chelsea and I made that huge first leap:
#1 | The Neighborhood
Your first year in your new home can quickly be tarnished by your surroundings. Neighbors (or pets), crime, traffic, trains or airplanes, busy roadways, junk/trash, or even gun shots from target shooting next door… This can all equate to a For Sale sign being stuck in your yard before the 1 year Home-versary!
Solution: Contact local law enforcement and visit the neighborhood during your Inspection Period.
There are pages of websites offering “Crime Data Maps” and satellite data. I tend to question the accuracy and relevance of these sites. Do they have someone that lives in the area? Probably not. Do they communicate with local law enforcement regularly? That’s a big fat nope. There’s no easy way to do it, so do it yourself! Visit the neighborhood at night to monitor what goes on, especially on the weekends. You may need to go more than once. You could even introduce yourself to the neighbors if you aren’t the shy type.
#2 | Closing Costs & Interest Rates
My lending partners are going to hate me for suggesting this… But most first time home buyers settle with getting their first Mortgage Pre-Approval. They never shop around for the best rates and ask for Closing Cost and Mortgage Estimates! These numbers vary depending on who you finance with, so get a few quotes. I know you’re thinking, “Byron, won’t my credit score drop way down if I submit all of those mortgage applications?”
If you’re shopping for a mortgage, multiple inquiries should not hurt your score. – NerdWallet
It may drop two or three points, but it should correct on your next Credit Rescore. If your credit score is close to the margin and a few points could ruin your Mortgage Pre-Approval, I’d suggest getting credit advice from a great Mortgage Professional. Michael Shadowens with First Choice Lending Services has been a life saver for my First Time Home Buyers. Give him a shout – (865) 248-9620.
#3 | Fixing Up the Property
I learned this one the hard way… I walked through the house with my wife saying, “I can fix that.. What, the counters? That’s easy.. The electrical? It’s running through the basement. I can do that.”
Don’t be an Over-Achiever. Be realistic! If your work hours allow it, and you’re better than the average person at home improvement – jump in head first. Otherwise, buy a home that’s move-in ready. You aren’t going to want drywall dust, sawdust, and clutter all through the house while you’re living in it. Especially if you have a baby (like my amazing daughter Hazel Mae).
Cost is another big point here… Sure, our mortgage is next to nothing. But look at what I’ve spent on our house after buying it:
- New Windows – $9,400 (19 or 20 windows)
- Wood Burning Fireplace & Vent Repair – $4,200
- Washer/Dryer Relocation – $2,100
- Breaker Panel Upgrade (100W to 200W) – $2,700
- Upstairs Bedroom Remodel – $6,000
- Upstairs Bedroom to Bathroom Conversion – ??? (unfinished)
- Paint, Electrical Wiring, Fixtures, Caulk – $3,000 (so far)
Take that $27,400 above and divide that into 40 months of ownership – $685 a month. If we would have gotten approved for a mortgage that was $685 a month higher than what we’re paying, we would’ve gotten a great house at that time. Probably larger than this one too, with much less headache. And I’m probably leaving some expenses off of this list.
#4 | Your Loan Type & Lender
There are Lenders and Realtors out there who do not go over all of a Buyers lending options when they have their first mortgage approval discussion with you. Don’t just choose the person that sounds nice on the phone… Choose the professional that is the most helpful and provides the most value.
There are also Buyers out there that refuse to speak with a mortgage institution until they find the house that they like! That’s a mistake. You’re going to be wiser than that.
These are pretty solid options if you’re like most First Time Home Buyers, and you don’t have thousands of dollars to use toward your down payment and closing costs:
Tennessee’s Home Buyer Down Payment Assistance Program (THDA)
Georgia’s Dream Home Ownership Program
0% Down USDA Rural Development Loan
Remember that most loan types require Private Mortgage Insurance (PMI). PMI on most loans “falls off” of the mortgage when you’ve paid 20% off of the Principle of the total loan amount. Mortgage Loans are amortized though, meaning you pay more in interest in years 1 to 15 than you do in years 16 through 30 on a 30-year fixed mortgage. So you’ll have to contact your lending institution directly and set up a payment to reduce your principle. Your monthly mortgage payment will still be due that next month! Don’t forget to factor that in.
#5 | Choose the Right Realtor
If you’re buying a home for the first time and you aren’t using a great Realtor, I’m at a loss for words with you. Look, I’m a Realtor – I get it. You may feel that I’m advocating for my profession. Trust me when I tell you, today’s Real Estate Market is a swirling hurricane with moving parts. There are plenty of Buyers out there wanting the same house that you want. A great Realtor should provide the following for you:
- Negotiation – (Price, Closing Costs, Repairs, Timeframes)
- Network of Professionals – Inspectors, Contractors, etc.
- Guidance & Advice (experience)
- “Psychiatrist” – This is a joke, but don’t think it isn’t legit!
- Research – Property Restrictions, Special Assessments, Flood Planes, etc.
- Comparables – Pricing of properties, SP/LP%
- Legal Contract Maneuvers
- Meeting Deadlines
I could expand that list, but I’ll spare you the excess. I genuinely care about the people that I work with. I feel honored that they would trust me, and allow me to guide them through the experience. In my mind, that makes us like family in a lot of ways. I have family members and close friends that haven’t used me for a real estate transaction too! I’ve learned to appreciate my loyal clients, many of whom I’m still friends with on social media.
If I can answer any questions, or help you in any way – even if I’m not representing you – I’d love to help make your life easier. Give me a shout: HatcherByron@gmail.com.