5 tips for first-time home buyers

You’re considering buying your first home — congratulations! That’s a significant milestone in life, but it’s also a big decision that involves a major financial commitment. You want to make sure you approach it smartly, so here are some important tips to help you make this decision. 

1. Make sure home ownership is right for you 

Purchasing a home brings a lot of responsibilities that demand considerable time and money. The real estate market can be volatile, and even if prices are predicted to fall, it may not come to fruition. If home prices do start to fall, it’s impossible to predict exactly when they will hit bottom, so if you wait too long, prices could start climbing again.  

Additionally, home ownership involves a lot more than just the property price. Once you’ve bought a house, you need to think about home repairs, improvements, furniture purchases, property upkeep, and the need for a range of tools that, as a renter, you never needed before. Everyone’s situation is unique, and the decision to buy may be influenced by several factors, but it’s important to be sure you’re financially and mentally prepared for this commitment. 

2. Understand what you want 

Narrow down what you want out of a home (e.g., condo vs. single-family home), where you want to live, and how much you can afford. This will help focus your search and use your time efficiently. If you’re buying a home with someone else, it’s even better to do this with that person to ensure you’re on the same page. 

3. Determine what you can afford 

Mortgage rates have been surging since their pandemic lows in 2021, and recently not only are mortgage rates rising, but also prices are increasing.¹ So, monitor the market and consider different mortgage options carefully. A 15-year mortgage might seem preferable, but a 30-year mortgage may afford you a lower monthly payment and more financial flexibility. Don’t forget, your ability to get a mortgage will be based in part on your creditworthiness. If your credit score is low, consider taking steps to improve it first. 

A reputable mortgage calculator is also useful in determining monthly payments. You’ll need to know how much of a down payment you can afford. Remember to factor in property taxes, homeowner’s insurance, and other bills, such as utilities, repairs, appliances, etc. It’s always a good idea to talk to a financial professional to help you create a more specific mortgage plan. 

4. Work with a realtor 

Home values can vary widely, but realtors know the market and the neighborhoods you’re considering. They also have access to inventory that may not be publicly available yet, granting you early access. And they can provide you with comps to make sure you’re getting a fair price. Just know that while realtors are a potentially valuable resource, you should find out whether they work for the buyer, the seller, or both. 

5. A home is not (necessarily) an investment 

Your home may turn out to be a good investment, but there’s no guarantee that its value will increase. Instead of buying a house for investment purposes, buy a house because you want to create a home. You can remodel, expand, or make your space pet-friendly. A home is yours, and you can personalize it in every way imaginable.

Purchasing a home for the first time is filled with questions and uncertainties. Starting the process with these tips in mind and reaching out to a financial professional may alleviate some of the stress, so you can focus on the excitement.