Important Decisions Every First-Time Home Buyer Will Need to Make
Buying your first home is one of life’s most exhilarating roller coasters. “It was the best of times, it was the worst of times,” as the old literary saying goes.
On the one hand, the experience is often buoyed by excitement and pride – here you are, buying your first home, a major milestone in life that sets you on the right path toward equity building. And it can be fun touring homes, imagining your new life within each room.
On the other hand, the experience is also fraught with challenging decisions, esoteric terminology, a traditional lack of resource access and the incurrence of a sizeable amount of (good) debt.
Your job as a first-time homebuyer is to try to remain level-headed and pragmatic and make wise decisions aligned with your long-term personal and financial goals. In this article, let’s review a few critical decisions you’ll be asked to make during the home-buying process. Where possible, we will offer actionable tips for making the right choice. But understand that often in real estate, there’s no one-size-fits-all choice.
Choosing the Right Real Estate Agent
Finding the right real estate agent is the first step toward a positive homebuying experience. A quality advocate can mean the difference between landing your dream home and being shuffled through the hoops for a quick sale. Ideally, you want an agent who’s honest, well-reviewed and experienced, and whose services fit your needs.
This is why many turn to the real estate digital marketplace, Nobul. On Nobul, you can input your criteria and view several relevant options for real estate agents. (I.e., you aren’t at the mercy of your parents’ recommendation or the Yellow Pages). You get exactly what you want from your representation.
As Nobul CEO Regan McGee put it to Superb Crew, “Purchasing a home is one of the biggest decisions that many people will make in their lives… it is personal, and we aim to facilitate homebuyers’ ability to choose the agent best suited to their needs.”
How Much Down?
The next thing to consider is your down payment. Depending on where you live, you may encounter various minimum down payment rules (5% is the norm for a first-time homebuyer minimum). If you can, put much more than the minimum down. You hear cautionary tales of first-time homebuyers putting down 5%, overextending themselves with a second job, then failing to meet minimum monthly payments when their augmented salary decreases.
If you can, work toward a listing price that allows you to put down 20%, which allows you to sidestep paying mortgage insurance. If you can’t make 20% work, just do your best to put down as much as possible.
Variable or Fixed? Urban or Suburban? Subjects or No Subjects?
With a real estate agent engaged and a down payment plan in effect, you can get serious about looking for a home. Assuming you’ve already undergone pre-qualification and pre-approval, you can start thinking about whether you want a fixed or variable mortgage. Many factors will contribute to this decision; there are no hard-and-fast rules. Speak with a trusted mortgage advisor to determine which is best.
Next, consider the type of property you want, whether it's a condo in the city, a detached home in the suburbs or a fixer-upper in the countryside. This decision boils down to personal taste and long-term goals (i.e., whether you plan to raise a family, how much you value the urban experience, etc.).
Finally, work with your realtor to develop a competitive bidding strategy that works for your risk tolerance and budget. Ask your real estate agent about whether “subject-free offers" are suitable for you (i.e., if you’re buying in a hot seller’s market) or if a regular, conservative approach is advantageous.
Hopefully, these few short tips will help guide you through your first home-buying process. With a quality real estate agent, a down payment game plan, and the right mortgage and buying strategies, you can sit back and enjoy the roller coaster.
