Purchasing your first home is an experience that will generate a wide range of emotions for even the most level-headed of buyers. From the excitement of finding a property to the overwhelming amount of paperwork at closing, one thing is for certain – it is bound to be an experience that you will never forget.
Below are a few things to help you prepare to make the largest purchase of your life.
Before You Buy
- Plan Your Budget
You probably started saving for a down payment long ago – but if not, now’s the time! Start pulling together your options to figure out the amount of cash you will have available at time of purchase. Make sure to include closing costs (approximately 2 to 5 percent of your future home purchase price), home inspections, and other fees in your budget that occur around closing time and require up-front payment. You may also want to plan to cover moving expenses, and keep a small cash reserve for unforeseen immediate expenses in this area of your budget.
Developing a plan for your future monthly home expenses also has many factors to consider. In addition to the mortgage, make sure to consider things like property tax, home insurance and monthly utility bills.
Now that you’ve determined your budget, start looking for a mortgage lender with a good reputation of service and timely closings. Your loan approval amount will be dependent on factors such as your monthly income, debt, credit score, and profession. Discuss the many mortgage options available to you with your lender. For example, it's common for a down payment to equal 20% of the sale price, but for many first-time home buyers, that is a monumental task. A less daunting option is to consider an FHA (Federal Housing Authority) Loan, which only requires 3.5% of the sale price for down payment. This may provide you with a different perspective on what you are able to afford. Also, make sure you discuss the pros and cons of a fixed-rate mortgage versus an adjustable rate mortgage, or a 15-year mortgage versus a 30-year mortgage. These variables often mean the difference of tens of thousands of dollars over the life of your loan.
Do Your Research
If you’re considering buying a home, you’ve most likely already stumbled upon online resources such as Zillow.com or Redfin.com that allow you to search for and view homes on the market based on a wealth of criteria. Start looking at homes in your price range, based on your pre-approved mortgage amount, and figure out what is important to you and what concessions you are willing to make. Would you rather buy a fixer-upper if it’s in a good school district, or would you prefer a home that is move-in ready even if it’s a longer commute to work? Having a clear, but flexible idea of what you are looking for will help streamline the search process.
Hire the Right Real Estate Agent
You’ll want to work with a professional real estate agent who is an expert in the market and area you are considering to live in. In the maze of processes, financing, inspections, showings, and negotiating, a real estate agent will help you navigate the home buying process smoothly. Your realtor will help you narrow your search so it aligns with your priorities and will help you make an informed decision when it comes time to make an offer on your dream home. Ask your friends, family, or mortgage lender for reliable references.
Inspect Your New Home
Make sure that your home inspection is trustworthy and thorough, inspecting all aspects, from roof to foundation. When evaluating the exterior of the home, look for potential winter storm damage, or any issues that may have been in existence for a while. For example, missing roof shingles might not seem like a big deal at first, but if they have been missing for years, there may be a bigger issue lurking below. As for the rest of your home, make sure the inspection report includes the HVAC systems, foundation, hot water heater, fireplace and/or chimney, electrical box, and other major systems and appliances. You’ll want to identify any potential issues as soon as possible to negotiate repairs or expense costs into your closing.
Protect Everything with Home Insurance
Before you close on your new home, you will be required to have a homeowner’s policy in place. A standard homeowners insurance policy insures the home itself and your property within. It will also provide you with coverage for liability or legal responsibility for injuries or property damage that you or members of your family cause. Using an experienced insurance agent like Eastern Insurance will help you get the coverage that you need at the best prices on the market, and will eliminate the guesswork.
After the Purchase
- Perform a Home Inventory
For many reasons, when you are getting ready to move is a great time to create a home inventory. First, it is one of the few times you truly realize how much you own! You’ll be moving and handling every single item in your possession, so you might as well photograph and document it as you pack. Second, the simple act of moving presents a certain amount of risk to your possessions, and you will want to have proof of exactly all that you own prior to moving. It is fairly common for boxes to go missing or furniture to become damaged during the process, whether you are moving on your own or hiring professionals for you. Accidents happen, as does malicious theft, and it is best to be prepared. Finally, make sure to update your insurance agent to make sure your new home insurance policy has the appropriate levels of coverage. By having a current inventory, your agent can identify how much you need in personal property coverage or any items that may require their own special protection. Learn more about completing a home inventory here.
- Have Fun & Decorate
Now you can make your new home your own. You may have a big project on your hands to renovate or remodel, or you may only need to make cosmetic changes. Whatever your plan is, it’s time to start making memories in your new home, so have some fun! You can save some money by making simple changes such as cabinetry knobs, drawer pulls, and lighting to give your space a fresh look with touch of your own personality. You can also save money with DIY projects, and never underestimate the power of a fresh coat of paint. Visit DIY Network, Apartment Therapy, and The Spruce for inspiration.
If you have more questions, or would like to talk to one of our experienced personal lines agents about protecting your new home, please call us at (800) 333-7234, email us at firstname.lastname@example.org, or visit our website to learn more about the insurance solutions that we can provide for you.