Buying Your First Home? First Time Buyer Rules
If you are a young adult moving out for the first time, you need a set of guidelines to help you with purchasing your first home. Consider these first time buyer “rules” as you begin searching for a home for sale:
Determine a budget and stick to it.
Just like an engagement ring should cost you two months’ salary, your monthly mortgage payment should cost roughly one-third of your monthly take-home pay and no more. The only exceptions are 1.) If you are moving to a metropolitan area (our audience is those seeking homes for own a home in New Orleans suburbs, which is not metropolitan), or 2.) You plan to share the home with a roommate (preferably, one that is already lined up).
Don’t make the mistake of searching for homes out of your price range, thinking that you can make up the difference in your mortgage payment by getting a roommate if the “right” house comes along. Lots of out-of-price-range homes are easy to fall in love with, but the right roommate may never come along to help you afford them. It is far better to choose a house in your price range based on your situation today, whether you are buying a home by yourself or with a committed roommate. For many first time home-buyers — condominiums are a good option. If you choose to look into condos — be sure to factor in the condo fees and thoroughly review your condo documents.
Many first time home buyers find themselves discouraged with the homes that fit their personal budget. In some instances, you can purchase a condo (for the same price) that has more amenities and features than the equivocally priced single family home. Depending on your budget, you may even be able to look into luxury condos for the same price as a mediocre home.
Get with a qualified mortgage broker.
One of the first things you should do when buying your first home is get with a qualified mortgage broker. The lender that you choose will make a substantial difference on how smooth your transaction goes and how much you will ultimately spend on your new home. Although there are many mortgage lenders out there, all promising you the world, at the lowest rates, many fall short when you get close to the closing table. Be sure to choose a lender that is local and come recommended by your REALTOR. In most instances, your REALTOR will have intimate knowledge of the success rate and personal reputation of local lenders. Be sure to get Pre-Approved for your mortgage before searching for homes for sale.
Decide on your must-haves
And, learn to differentiate between what you must have from what you would like to have. Here are some examples of practical “must haves” vs. “would like to haves” for the typical first time renter:
- Decent neighborhood = must have
- Swimming pool = would like to have
- Near work or school = must have
- Two bedrooms (without a roommate) = would like to have
- Two bedrooms (with roommate) = must have
- Major appliances = must have (for most first time renters)
Once you make a must have vs. would like to have list, you can more confidently choose which rental homes you want to put on your short list.
Use a Real Estate Agent.
Rather than scouring Craigslist or Zillow and cold calling home sellers who may or may not be experienced, trustworthy or even legitimate (Craigslist is loaded with fraudulent real estate schemes), it is better to play it safe and contact a licensed real estate agent to help you find a the perfect home. We define “real estate” as a state licensed real estate agent who has experience assists first time home buyers with purchasing their first home. The REALTOR should have intimate knowledge of the available financing options that generally assist first time home byers. Find a real estate agent that fits that description; if you are a first time home-buyer in Lakeview or Covington, call us today for a list of homes in the area.