Buying your first home isn’t the type of decision that’s made overnight. It’s not something that suddenly pops into your head so you head out the door and start visiting open houses. Instead, it’s a thought that gradually creeps into your head over time. Maybe it was a coworker who keeps talking about the new home their family just bought. Perhaps you’re paying more attention to the advice you get from your parents and friends. After all, there doesn’t seem to be any shortage of “rent vs. buy” articles on the internet, is there? And don’t they all seem to end up telling you that buying is better than renting? That rent is doing nothing more than throwing your money away each month, making the mortgage payments for your landlord instead of becoming a homeowner and building equity. The math almost always favors buying. Learn more about what first time buyers should expect.
Once you have finally come to the decision to stop the rent cycle and buy a first home, you’ll be sharing some of the feelings that other first time buyers felt when they went through the very same process. Financial planning, calculating monthly payments and figuring out what you can afford. Whether you’re buying a condo somewhere in Miami or you’ve got your heart set on a single-family home in Jacksonville, there’s quite a bit of preparation and planning ahead of you. But to help out with this preparation process, here are a couple of tips you need to know about when embarking on your very first home search.
You’re the Boss
First, understand that you’re the boss. Once the word gets out that you’re getting ready to buy your first home, suddenly you’ll be getting referrals from friends about the real estate agent they used or how they found their first home. Maybe you’ve already called up a real estate agent that’s also a friend of yours and let that agent know you’re thinking of buying. Someone at work has a spouse that’s a real estate agent so you think it’s a good idea to talk to that agent as well. In fact, you really should interview more than one real estate agent, regardless of any current or previous referrals. Just because your coworker knows an agent doesn’t mean that’s an automatic fit for you.
When buying your first home, financing will also be on the top of your list. There’s no doubt you’ve already gone online and tried out a few of mortgage calculators to see what type of monthly payments you might have with different loan programs and different loan amounts. And hey, you’ll need insurance too so it’s time to give your insurance agent a call and start that process as well. The real estate agent, your lender and your insurance agent are just three of many players who will touch some part of your transaction.
Once you’ve decided to take the leap and talk to your mortgage loan officer, be prepared for no shortage of advice. These various third parties are professionals in their respective field and they’re there to provide advice and answer your questions along the way. At some stage, it’s possible you’ll be getting so much advice that it’s starting to get a little bit out of control.
Just remember this- you’re the boss. No one gets paid a dime unless you buy that home. Don’t let the process of buying your first home be intimidating. Granted, that may be easier said than done because buying a home means there’s a lot of plate-spinning going on. When things get overwhelming, step back and have everyone just slow down a little.
And in light of “being the boss,” remember that it’s you who will be making the mortgage payments from now on, not your agent or loan officer. If you want to buy a home in the suburbs or rural, that’s your decision. If you’re looking at buying into an area with the best public schools, that’s completely up to you. Don’t let someone else talk you into moving somewhere or taking out a particular type of mortgage that you’re not comfortable with.
Here’s a good example of that. Let’s say that you spoke with your loan officer and after a phone call you found out that you could qualify for a mortgage payment of $3,000 which includes amounts for taxes and insurance. That works out roughly to a loan amount just north of $400,000. But over the past few years, your monthly rent payments have been closer to $2,000. $3,000 seems like such a leap from $2,000. That’s a 50% increase in housing payments.
Instead of buying the maximum amount you can qualify for, maybe staying in the mortgage payment range you’ve been paying. Maybe you’ve decided the maximum payment you’d like to have each month is something closer to $2,300 total for a loan amount around $330,000. There’s no reason to borrow the most you can qualify for. If writing a check each month for an amount that makes you a little nervous, then don’t. Buy and finance a home where you want to live in the price range that you want to buy.
When first speaking with your loan officer, relate how much you’d like your monthly payments to be instead of just how much you can qualify for. That gives your loan officer more information to work with. You’ll be provided with a comfortable monthly payment and a loan amount in addition to a maximum qualifying loan amount. What you can qualify for and what you’re comfortable paying each month can be two different things.
Remember, once your loan closes and the settlement agent hands over the keys, everyone else involved in the process is on to the very next deal. A successful loan officer will have anywhere from 10 to 20 or even more deals close each and every month, while you are likely to own maybe three or possibly four different homes over your lifetime.
First time buyers that have questions can call us 7 days a week at ph: 904-810-2293 or just submit the Quick Request Form at the top of this page to get started!