When it comes to buying a home for the first time, many important factors can get overlooked with the expectation to find your “dream home”. In a recent survey conducted by real estate website, Clever, “51% of millennial’s say they have regrets about buying their home”. The survey found that young people are much more likely to experience buyers remorse than older generations due to overspending and a lack of predicting the future. While it’s easy to get caught up in all the excitement, here are 3 things to remember when buying a home for the first time. These simple tips could save you from buying a home that isn’t right for you.
Don’t over spend on the down payment.
Buying a home is one of the largest purchases you could ever make in life. You’ll want to make sure that you can afford to pay a 20% down payment on the home. According to the survey, “more than two-thirds, or 67% of millennial homeowners, that put down less than 20% on their home ended up having higher monthly payments”. Purchasing a home without a 20% down payment may require you to pay private mortgage insurance until you have paid off 80% of the homes current market value. PMI can add up quickly and typically costs about 1% of your outstanding loan balance, on top of monthly mortgage payments.
Think about what you can afford as a monthly payment, and don’t forget to include insurance and taxes in your calculations. Avoid doing something you may regret later, such as dipping into your retirement savings in order to afford the down payment.
“Discuss purchases with a qualified lender and be aware of the total cost in owning. If you don’t plan on staying in the home for at least 5 years, it may not be the right time to purchase a home” says David Martin of Team 24/7.
When looking for homes, try using filters on home search websites to make sure you’re not shopping above your budget. Remember that your first home may not be your dream home, it is a building block for your future.
Don’t underestimate ongoing costs.
Remember that the purchase of the home is not the only payment you will need to worry about. Once you move in you’ll have to pay monthly utility and internet bills. You’ll also need to factor homeowner’s insurance into your monthly budget.
Be sure to keep a little extra money in the bank for any emergency repairs that may pop up. Take the time to learn about the maintenance your home may need so that you are prepared to make necessary repairs. It could be pricey if you buy a fixer-upper that requires big projects which requires investing more time and resources into home repair, maintenance and renovations.
Don’t settle on a home that isn’t right for you.
Finding the right fit is just as important as having the right budget when it comes to home ownership. Before you begin your home search, make a list of must-haves and tell your realtor what criteria is most important to you. Find what you are willing to compromise on. You can always budget for renovations down the road.
Although your first home may not be your dream home, you’ll want to find a home that is a perfect fit for you and your lifestyle. Remember to look into the area that the home is in and make sure you are happy with the location.
When you’re ready to purchase your first home… We Make It Happen!
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