If you’re ready to stop paying your landlord and start buying a home, now is a perfect time. With low rates and many available programs, you have plenty of opportunities available. Before you jump in and buy a home, though consider these 10 thing that make buying a home easier for Louisiana first-time homebuyers.
1. Don’t Buy for your Life Today (Think of the Future)
It’s easy to focus on your life in front of you, but a house is a long-term commitment. Let’s say today it’s just you and your spouse. But a few years from now you add to your family. Suddenly there are 4 or 5 of you, not just 2.
If you bought a house big enough for only the two of you to be comfortable, you’ll outgrow it fast. You could sell the house and move, but it costs a lot of money to move, and what if the housing market isn’t at its prime at that time?
Buy for your life at least 5 years from now. I know, it’s hard to predict what tomorrow will look like, let alone 5 years from now, but give it your best shot if you’re thinking about buying your first home.
2. Think about Commitment and Home Values
Buying a home is a long-term commitment. Not only are you responsible for the mortgage for the next 30 years, but the home is your investment. If you’ve watched the news at all, you know that home values rise and fall, sometimes much more than we’d like (such as the housing crisis of 2008).
If this isn’t a long-term commitment, you must prepare yourself for falling values. What will you do if you owe more than the home’s worth? Can you rethink your plans and stick it out or will you be forced to move and take a loss?
3. Good Credit Scores Lead to Better Mortgage Loans
The moment you think about buying a home, start working on your credit score. A high credit score speaks volumes to mortgage underwriters. You’ll not only have an easier time getting approved, but you’ll get the lowest interest rates and fees.
Pull your free credit reports and check for the following:
- All payments are made on-time
- No outstanding collections
- Credit cards have no more than 30% outstanding
In the meantime, don’t open any new credit or run up your current credit cards. These habits will increase your credit score and your chances of approval
4. A Down Payment is Necessary, but not 20 Percent
The good news is you don’t need 20 percent down. You can put as little as 3% down in some cases and still get great terms. The earlier you start saving, the more money you’ll have when you buy the home.
5. You Buy into a Neighborhood, not Just a House
Don’t focus on the house alone when you look at properties. While you want a home that you love and that suits your family, you also buy into the neighborhood. When you find a house you like, do your due diligence on the area.
Are the neighbors friendly? Is the atmosphere different on different days (drive-by weekdays, weekday nights, and night and day on weekends)? Does the community seem tight-knit? Think about what you want out of your neighborhood and see if that’s offered in the home you like.
6. Don’t Ignore the ‘Other’ Home Costs
Your mortgage payment pays back the money you borrowed plus interest and possibly mortgage insurance. There are other costs too. Real estate taxes are the big one. They vary by area but often take up a significant chunk of your monthly income.
Look at the historical tax rates. Do they often increase in the area? Can you afford the taxes if they increase?
Don’t forget about regular home maintenance and unexpected repairs. Plan to spend around 1% of the home’s value on home maintenance and repairs. If you buy a $200,000 home, will you have at least $2,000 handy for extra repairs?
7. You’ll Need Homeowner’s Insurance (and Maybe Flood Insurance too)
If you have a mortgage (and even if you don’t), you should have homeowner’s insurance. The lender will require it and force place it if you don’t have any. If you live in a flood zone, you’ll need flood insurance too. It’s more expensive than homeowner’s insurance, so make sure you budget accordingly when choosing a home.
8. Don’t Focus on the Home’s Cosmetics
When you look at homes for sale, don’t focus on the color paint on the walls or other easily changed cosmetic issues. You can change them when you move in if you buy the home. Instead, focus on the structure and layout.
Do you want a single story or two-story home? Do you want an open layout or a more private layout? Think of all things structural that would cost too much to change when you move in – cosmetic issues are something you can change over time.
9. Stick to your Budget
Don’t get caught up in the excitement of buying a home. Know your budget and stick to it. If you have a real estate agent, make sure he/she understands your budget so you only look at homes you can afford.
Also, don’t get caught in a bidding war. It’s easy to let emotion take over causing you to bid more than you wanted to spend. If a bid gets too high, get out, and know that there will be another home better suited for your budget.
10. Focus on the Market
Know what type of market you’re in when you buy a home. If it’s a buyer’s market, you may score a home for a better price. A buyer’s market means there are a lot of sellers and not enough buyers. Sellers will often do what they can to get their home off their hands, including letting it go for a lower price.
A seller’s market, on the other hand, is tougher for buyers. In this market, there are more buyers than sellers giving sellers the advantage. They often charge more for the homes or don’t settle on low bids because they know other buyers are waiting.
Before you buy a home know what you can afford and what you want. Write everything down. Make a list with any other adult household members of your needs (non-negotiables) and wants (you can live without them).
When you shop for a home, keep your lists with you, don’t let emotions get in the way, and find the home of your dreams.