You’ve saved. You’ve waited. You’re finally ready to buy your first home. Here are the important questions to ask yourself and your real estate agent before taking the plunge from a longtime renter to a first-time homeowner.
What to Ask Yourself
How much house can I afford?
Start by using a free online calculator such as NerdWallet to get a general idea of costs. When you’re ready to start looking, talk to a local lender to see how much you can realistically afford. “In this highly competitive market buyers should get a pre-approval,” said Deborah Solo. A pre-approval means the lender has checked your credit and verified your finances to approve a specific loan amount.
What location is best?
This may be one of the most important questions on your list. It includes your work commute, quality of schools, distance to restaurants and shops, parking options, and closeness to public transit. Before making an offer, visit the neighborhood several times at night and on weekends to get a better idea of the vibe. Consider the overall condition of other homes, street lighting, traffic, parking, and noise.
What are my deal-breakers?
Every first-time home buyer has their own list of must-haves and deal-breakers. For some, the home must be totally renovated and include parking, a yard, or a roof deck. Others are open to a fixer-upper in an affordable neighborhood in transition. The better you can communicate your priorities to an agent, the better your chances of getting what you want. If you want an environmentally sustainable home, you will be looking for things like Energy Star appliances, energy-efficient windows, heaters, and dual flush toilets. If your dream house doesn’t already have them, consider how much it will cost to add them.
Ask your agent
1. Do you see any problems with this house?
Agents have walked through hundreds of homes and are able to spot potential problems most home buyers miss, including water damage, sagging ceilings, roof problems, or even termites. Find out in advance how much these issues will add to the total cost of the home.
2. Can you recommend a good inspector?
Again, the more you know about a property’s condition, the better.
3. Would you buy this house?
A good real estate agent will give you an honest answer and explain the property’s advantages and flaws.
4. What expenses should I expect after buying this house?
Depending on the condition of the property, your realtor should be able to provide a list of potential expenses which may include updating appliances, adding a bathroom, or installing more environmentally efficient windows. Agents like Deborah, who has a background in architecture, or Alex, whose home was a full rehab, can also give you an idea of what renovating costs might be if you decide a rehab project is in your future.
5. Why is this house for sale and what is its sales history?
Regardless of the information provided by the listing agent, your real estate agent can research the property’s history, along with area comps to let know its true value.
6. What concessions and contingencies should be included in the contract?
It’s a good idea to know what you want to be included in a contract before you start house hunting. A common concession is asking the seller to cover all or part of closing costs (called a seller’s assist.) Contingencies allow you to back out after signing a contract if the house doesn’t pass inspection or if you do not qualify for a mortgage. In most cases, you want to get a mortgage in advance of hiring an agent.
7. What is the resale value in this neighborhood and which way are prices going?
This question will allow you to determine what your return on investment will be if you decide to sell later on.
8. How much should I offer for this house?
In today’s market, buyers often go higher than the asking price. Talk to your realtor about making a fair offer but don’t feel pressured to offer more than you can realistically afford.
9. What are the closing costs?
Usually, around 6% of the purchase price, unless it is a cash transaction. Your lender can give you a better estimate of how much they’ll be.
First-time homebuyers are eligible for a wide variety of financing, including down payments as low as 3.5%. The FHA loan is the most popular government-backed home loan in the country. Their site provides an eligibility calculator which includes the price of the home you wish to buy and the amount of your down payment.
Freddie Mac and Fannie Mae also offer mortgages with 3% down payments for applicants with a 620 minimum FICO score. Veterans qualify for VA Loans and are considered the best mortgages available.
At Solo Real Estate, we are experienced in helping first-time buyers identify properties that meet their needs. We look forward to answering your questions and finding a house that matches your lifestyle, budget, and investment aspirations. Check out our new digs posts to read stories of some of the clients we’ve helped with purchasing a home.