If you've never owned property before, buying your first home is an exhilarating experience. From the early stages of your online home search to meeting with an expert real estate agent to discuss your needs to touring homes and ironing out the financial details, and closing the deal — it's a huge undertaking.
Whatever hurdles you face along the way are well worth the effort once you step across the threshold of your new home. Before you get started, there are a few things worth knowing upfront to ensure your home search is as smooth and successful as possible.
The Financial Cost
If you're ready to buy your first home, no doubt you've taken stock of your financial health to gauge your budget. If you're like many first-time buyers, this self-evaluation considers only the down payment, mortgage, property taxes, and insurance.
Those are certainly critical financial considerations, but they are far from the only costs when buying a home. Regardless of the type of home you hope to secure — single-family or a condo, historical property, fixer-upper, high-end new construction — there are numerous expenses you'll want to account for both before and after your home purchase.
For example, the costs involved up to and through the closing include:
- Down payment
- Appraisal fees
- Inspection fees
- Closing costs
- Moving expenses
Even in an all-cash situation, you'll still be on the hook for several of the fees involved in securing the home. Although they may seem insignificant in comparison to the overall cost,
it's wise to be aware of what these are.
Upon closing a home is where you'll see the full scope of homeownership cost emerge. These costs include:
- Mortgage payment
- Insurance
- Property taxes
- PMI (if applicable)
- HOA dues (if applicable)
- Utilities: electricity or gas, water, sewer, and trash
- Internet or cable
- Property upkeep, including landscaping, pest control, seasonal HVAC
- Renovation costs (if planned; typically requires its own budget)
Many of the above costs will rise and fall depending on the location of your home. Sought-after neighborhoods often command loftier asking prices and are consequently assessed higher property taxes. The same is true for those near popular schools or major geographical points of interest such as coastal or mountain communities, or those on a golf course or lakeside property.
To keep your home search grounded, create a budget that takes these costs into account. Remember, just because a lender approves you for a specific loan amount you don't have to make a purchase to match that number.
Being house-poor is a very real phenomenon and can prove financially and emotionally taxing. As a first-time homebuyer, avoid overextending yourself not only with your first purchase but all the ones which come after.
Advantages of a Trusted Real Estate Agent
Real estate professionals are an invaluable resource for any homebuyer. They prove especially beneficial for first-time buyers who are unfamiliar with the route ahead. Great agents simplify the buying process, taking what at times can feel like an overwhelming maze and making it far easier to navigate. For those relocating to an unfamiliar area, an experienced agent is your window into this new world.
Not only do they show various homes for sale but provide context for your new surroundings, including:
- Pros and cons of specific neighborhoods or areas of town
- A property's pricing history, including if a home is appropriately valued for its age, amenities, and location
- Communities that are on the rise, in a downward trend, or those which could prove to be excellent long-term investments
- Demographic trends, major employment centers, top commercial districts, and an area's best schools and most notable attractions
Real estate professionals act as your partner and advocate throughout the purchase process. From the first time you meet to discuss your needs and budget to when the final contract is signed, they will represent your best interests every step of the way.
They also serve as a confidant or sounding board to answer any questions or discuss any concerns you may have. When more intense aspects of buying come into play — the offer and negotiation phase, inspection and appraisals, and closing — an agent’s extensive expertise will guide you.
To find a top agent who will best serve your specific needs, utilize referrals from individuals you trust. It's also worth considering real estate professionals with a proven track record of assisting first-time buyers with their home purchases.
Benefits of Being a First-Time Buyer
The U.S Department of Housing and Urban Development offers several definitions for who they consider a first-time homebuyer. Note there's no special definition or mention for second, third, or even tenth-time homebuyers. Why?
Buying a first home is a huge deal. Not only does it benefit the local economy, but it also lays the foundation for you to start building wealth. Beyond the financial implications, it's an immense step forward in empowering many aspects of your life.
Though you're buying a home for the first time, you still have access to all standard loan programs, including 30-year or 15-year fixed-rate mortgage terms for each. These include:
- Conventional loan: a standard, non-government backed loan
- FHA loan: a loan backed by the Federal Housing Authority; approval possible with low down-payment and low credit score
- Jumbo loan: loans set up for high-end property above a certain threshold, currently $548,250 for a single-family residence ($822,375 for high-cost areas)
- VA loan: backed by U.S. Department of Veterans Affairs; designated for all veterans and members of the armed forces (and their spouses); no down payment required
Depending on where you buy, your first purchase may come with several incentives. The majority of these offer assistance with your down payment or a reduction in closing costs. California and Marin County offer different incentive programs for first-time buyers.
Searching for a home
While first-time buyers have plenty of anxiety about purchasing a home, it's important to remember that the process can be a lot of fun. Searching for and touring homes opens your eyes to many different communities and neighborhoods, lifestyles, and architectural designs.
Shopping for a house helps define your actual needs and wants from a home. If you're buying in a competitive seller's market, similar to what emerged from the pandemic, you'll have to make some concessions. It's rare to check off every box from your wishlist, especially when housing supply is limited and buyers are flooding the market. Determine your must-haves before you start your search to streamline the process.
The search process can prove highly emotional as well. Big dreams get dashed when budgets are unrealistic or offer are rejected over and over. If you can't wait for conditions to turn more favorable for buyers, patience is essential. Keep an open mind throughout the process. Prepare yourself for setbacks and disappointments, but be sure to enjoy the journey. You're only a first-time homebuyer once in your life. You'll want to cherish the experience and all that you'll learn from it.
The Buying Process
Overcome purchasing delays by being prepared. The best option is to make an all-cash purchase. You'll cut out much of the third-party financial wrangling which most often delays a property's closing. If that's not an option, seek preapproval for your home loan. This step secures the finances for a mortgage and allows you to make serious offers on homes. Please note that prequalification only reflects potential approval, it doesn't lock in your loan.
When you are looking for a loan, shop around. It's your right to compare loans and lenders and select those that best serve your needs. As you near closing, you'll face the final steps of offers, inspections, counteroffers, and paperwork. In short, lots of paperwork. It's critical at this point not to move forward on a home if you're uncomfortable with any part of the process, terms, or contingencies (or lack thereof).
Competitive markets lead to bidding wars for the most desirable homes. Avoid trying to "win" a house, as it will upend your finances rather quickly. Also, don't waive the opportunity for an inspection unless you're 100% confident you don't mind dealing with surprises.
Having a professional thoroughly examine the home will ensure the confidentiality of your purchase. If they identify any issues, you can opt to have a resolution or concessions negotiated into the final contract. Again, a trusted real estate professional will serve as your advocate through these final stages of closing and securing the deal you want. Once you agree to the buyer’s terms, signatures are given, the loan funded, and you are now the proud owner of your first home.
Ready to explore the best of Marin County real estate? Contact April Smith today if you’re home searching or looking to list your current residence. From Sun Valley real estate to San Rafael homes for sale, April and her team's years of experience and expertise will guide you through the Marin County luxury real estate market.
