There is no greater joy than the one you get when buying your first home. It is an amazing feeling to call yourself a homeowner, especially when buying a property in your desired location.
However, the recent conditions of the real estate market do make it more challenging for people to buy a house or property. The economy is still recovering from the effects of the COVID-19 pandemic. There is also a lack of affordable housing in the US. Besides, people’s choice of where they want to live is gradually changing. Busy urban areas are no longer the most desired property options. Suburban spaces are growing in popularity, which is why house prices in those areas are also going up. freal
Buying a house has always been a difficult feat to achieve, and in recent times, it just got harder. So, you need to think and plan very carefully before investing in your first house. To help you get a better idea of how you can manage all that, here are five things you should consider before buying your first home.
#1 Study Market Trends
Understanding the real estate market trends is the first thing you should do before investing in a house. As a first-time buyer, it is natural not to know what is going on in the market. However, going in completely blind is never a good idea, especially in an economy that is not doing too well for itself.
Research the area you want to buy your house in, and check out all the listings available there. List all the amenities and facilities you can avail of if you buy a house in that area. Afterward, thoroughly compare the prices of all the listings you have seen.
Then, compare those prices with house prices in other areas. As we talked about at the start, people are slowly growing fond of living in suburban areas. So, you will notice that house prices in those areas, while not that steep, are still high compared to their prices ten or five years ago.
You can talk to a real estate agent to get a more in-depth understanding of the market. Realtors can also provide you with real estate market information for specific areas, which is something you need.
#2 Get Homeowners Insurance
Homeowners insurance will cover everything from your home and personal belongings to any injuries on the property. Not getting insurance when buying your first home is the biggest mistake you could ever make.
On average, the cost of homeowners insurance is $1,200 per year. The cost, however, will vary depending on where your house is. Homeowners insurance costs more in states like Louisiana, Florida, Kansas and Texas. Insurance premiums are cheaper in states like Oregon, Utah and Nevada.
Living in a disaster-prone area also increases the insurance premium. Prices also go up if your house is near the coast or far away from a fire station.
#3 Know Your Long-Term Goals
People buy houses for two reasons – they either want to live there or want to keep the property and sell it when its price increases.
You might have to invest in renovations and add new features to your house if you want to live there. That is especially applicable if you are buying an old house. However, you would want your home to look the way you like. So, it is natural for you to renovate or add more features to your house even though its existing condition is pretty good.
Selling your house at a later time means you have to invest in its maintenance. You might even want to renovate the whole place and sell it for a higher price right away. It would be best if you think of this as a business project rather than a personal one. After all, your ultimate goal, in this case, is to make some money off of it.
#4 Assess Financing Options
The average house sales price in the US is over $400,000, while the median sales price is around $380,000. On the other hand, the average salary in the US is around $5000. So, to buy a house, one would have to save their whole month’s salary for 80 months or around seven years. Logically, that is impossible. Thus, it is natural to look for other financing options.
Getting a home loan is one of the most viable options you have. For a 15-year fixed term, you have to pay back the interest at 5.375% and an APR of 5.508%. Or, for a 30-year term, you can get a rate of 5.99% with an APR of 6.071%. However, you need to compare the mortgage plans across different banks that offer such loans. Only then can you settle for one that suits you and your future plans with the house.
#5 Build Your Credit Score
A good credit score is vital for getting a mortgage, a car loan, or a student loan. Without one, it becomes difficult to get approval for these loans. Besides, a bad credit score also makes it difficult to get a credit card with a low-interest rate. Borrowing money from banks also becomes more expensive when you have a poor credit score.
You can build your credit score by paying your loans on time. Another way to ensure a good credit score is by making sure that you do not get too close to your credit limit. To avoid doing that, only apply for credit that you might need, and not more than that. As long as you have a long and decent credit history like this, you can expect a good credit score.
Buying your first house is always going to be a challenging task, especially in this economy. There are many bumps along the way, but at the end of the road is the beautiful and fulfilling experience of owning a house. So, stick to these tips as you go house hunting, and you will surely find the buying experience to be less difficult than it actually is.