My husband and I were married for almost 4 years when we bought our first house.
We actually – get this – bought it WITHOUT EVER SEEING IT.
We lived in California at the time in a gated community just south of Malibu (when I say gated community I mean the Navy base). We loved California but missed our family and we managed to get orders back to Chicago. We couldn’t afford to fly out to house hunt and we really did not want to have to put our stuff in storage to house hunt once we moved back, not to mention having to move AGAIN once we found a house.
So with a patient realtor and the help of the internet, we went house-hunting virtually!
Since we were moving back “home” to our family, when we found a house we thought we would like, we sent scouts – my mom, my mother-in-law and sometimes my sister-in-law to check the place out.
When you are a first-time home buyer, there are a lot of challenges and a lot of things you need to keep in mind and consider. Imagine doing it from the other side of the country. But we did it, and it turned out perfectly!
Here is the picture of our first house when we bought it:
We paid around $109,000 for it. It wasn’t perfect, but it had potential.
When we finally found our first home, however, we had a number of things we wanted to verify before signing on the dotted line. Back then (it’s different now, but if you have excellent credit, it may not be so different) – back then we were approved for a mortgage over $400,000. The bank was willing to loan us that amount of money for a house but the question is could we afford it? Did we want to?
Below are some of the questions we asked ourselves before buying our first home:
1. Can we afford it?
This question is about more than simply what the banks say you can afford. They don’t know you. They don’t know if you like to eat out for dinner every night or have an expensive hobby. If you take on a mortgage that is too large you potentially risk having to make sacrifices in other areas of your life. Is a bigger house worth the sacrifice.
New home buyers really need to examine their budget on a monthly basis and take every expense into account. Not to mention that home ownership comes with repairs and other things and you need to save up an emergency fund to be able to pay for the unexpected.
2. What about taxes and insurance?
To make a responsible decision, you have to get an accurate homeowners insurance quote from an insurance agent for the home you are interested in. Make sure the quote includes all the coverage you need.
Taxes are often hard to gauge, you can find out what previous owners paid but you have to keep in mind they may have different exemptions than you do. Don’t under estimate your tax bill.
3. How much is the house really worth?
Make sure you get all the “comps” for the surrounding area so you can see how much similar homes have sold for in the recent past in your area. You don’t want to over-pay for your house and you also want to make sure that you go in with a fair offer as well.
Keep in mind you can ask for certain concessions in order to keep the price at a more agreeable level such as the seller paying for your closing costs or leaving the appliances in the home.
4. What other expenses come with buying a new home?
Closing costs will probably be the biggest and most surprising expense when you buy a new home for the first time. It can equal thousands of dollars and if you don’t have it, you might have to roll it into your loan which increases your monthly mortgage payment.
You also need to consider that you will potentially have to pay to establish the utilities in your name.
Before signing an offer, consider making it contingent on an inspection. The inspection may cost you a few hundred dollars up front (and you risk losing it if you don’t end up buying the home) but it could save you thousands of dollars in the long run. Plus it gives you detailed information on the life of your home’s important and costly features such as the furnace, roof and other things that tend to need replacing during the life of a home. They will all check for mold and lead and other potentially hazardous conditions.
Finally, your real estate agent may ask you to consider supplying “earnest money” with your offer. This money is a sign to the seller that you are serious about your offer. You get a credit for the money at closing.
5. Do we need mortgage insurance?
Many people cannot afford to pay 20% down of the purchase price of their first home. Most banks will require you to buy mortgage insurance to protect the loan. It helps you by allowing you to buy a home even without the standard down payment. You maintain the insurance until you have enough equity built up to equal 20%.
Some companies even provide their mortgage insurance with special programs that help pay for your mortgage in case of hardship or job loss.
We examined all of those questions in detail and made the decision to buy that house despite the fact that it wasn’t our “dream home.” We didn’t envision living in it forever but it was a great start.
We lived in that house for almost 5 years before moving to a bigger home.
Here is what our first home looked like right before we sold it:
We sold it for $145,000. Not a bad appreciation for 5 years.
I still miss that house sometimes. The blood, sweat and tears we put in to making it our own. Our first child was born in that house (well he was born in the hospital but while we lived in that house). We had some of the best neighbors in that house. We really, truly began our life together there.
If those walls could talk…
We drive past it every now and then because we still have some family that lives in the area. Our son does vaguely remember it and we sometimes invite the ‘old’ neighbors over to our new home for major holidays.
Buying your first home is a very important decision for so many reasons.
The best reason of all is for the memories you make in it.
Have you ever bought a home? If not, why not?
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