Helpful Tips for First-Time HomeownersAugust 16, 2018
Picking just a few tips for a first-time homebuyer is not as easy as it sounds. If you have never been through the home buying process, you will be amazed at the volume of information and new language you’ll learn during the process.
This isn’t to say that it’s an arduous process—it should be anything but that! Buying a first home should be an exciting and rewarding time in your life—you are taking a giant step that will benefit you and your family for years and years to come.
Because of the responsibility of home ownership, you need to become aware of the buying process and surround yourself with an experienced, trustworthy, and hard-working team of professionals.
Money management is the first—and obvious—area that you should be concerned with. Not only should your income and cash on hand be able to handle the basic costs of down payment and monthly mortgage payments, you also need to factor in projected maintenance costs, utilities, taxes, home insurance, and the scariest category of all: the emergency fund.
These expenses are mostly self-explanatory, except maybe for the home insurance category. First-time homebuyers have never needed to buy home insurance and probably have no idea what is involved. Simply shopping for the cheapest policy is not always the smartest option.
Your income has to cover all of these recurring expenses, some of which will increase every year (i.e., taxes). Buying a home on a shoestring is a risky proposition—if something major goes wrong, it can wreck your finances to the point where recovery will be long and difficult.
Expect the Unexpected
Building on the money theme, this tip is vital. No matter how good your home inspector was or the rave reviews from the selling agent about how great the house is, after you move in, anything that goes wrong is your responsibility to fix. Entering into the home buying process with the understanding that the unexpected can and often does happen, and having the proper financial resources—which includes a well-structured insurance policy—will make your home ownership experience much more enjoyable.
Put yourself in this scenario: It’s your first full day after moving into your new home with your loving spouse. After taking some time off from work to move in, it’s time to get back to it. You are in the shower at 6:30 in the morning in the upstairs bath, when all of a sudden, your significant other comes running up the stairs screaming that the sink in the kitchen is backing up with the shower water and it’s leaking all over the beautiful hardwood floor that you fell in love with!
What happens next? Can you say emergency fund and good insurance policy?
You will need someone to fix something at some time, hopefully not immediately, but it will happen eventually. Now is the time to gather information on reputable repair people: HVAC, plumbers, electricians, carpenters, pest control company, etc.
Take time to meet your new neighbors and see who they are happy with—you’ll make friends in the process and build your support list at the same time. You don’t want to be Googling plumbers at 7 AM when the water is pouring out of your kitchen sink.
This has been mentioned a few times, but having the proper coverage in place for your home is so essential, it can’t be understated. A home is probably the largest single financial investment you will make in your lifetime—don’t risk it with improper/inadequate insurance coverage. Not all policies are the same—just as with your automobile policy, there are many options and variables to consider.
When you buy your home and set up the mortgage, unless you are buying in cash, the lender will not issue a mortgage without a policy in place. They need to be sure that in the event of a major problem their investment in your home is protected. You need to be sure that your policy protects you as well. The last thing you need are gaps in coverage should a catastrophe happen. Understanding the potential threats to your home is part of getting proper coverage.
Is your home in a floodplain? Do major weather-related events happen—hurricanes, tornadoes, forest fires? You might have a difficult time answering some of these questions and that’s why one of the most important members of your new home buying team is your insurance agent. They know your home’s area and understand any possible dangers.