10 Things to Consider When Buying Your First Home

Buying your first home can be both exciting and overwhelming.  While exploring the many possibilities before you, you will understandably have many questions and concerns about the process and may need help determining what you need in your first home.  Perhaps you've heard the saying, "We don't know what we don't know".  What this means is that when we are unfamiliar or new to a given situation, not only will we not have the understanding about the situation, but we may not even understand the right questions we should be asking.  For homebuyers, especially first-time homebuyers, it is very important to partner with a trusted REALTOR® that can help guide you along your journey and help you ask the right questions, as well as help you determine what you need and what you can afford.  Here are 10 things to consider when buying your first home.

1. Budget:  Perhaps the most important question: "How much home can I afford?"  Before even viewing properties with your REALTOR®, you'll need to determine how much home you can afford and whether you want to pay that much.  Contact your loan officer to discuss your income, debts, and living expenses to create a realistic budget for yourself.  Don't have a loan officer yet?  Ask your REALTOR®!  Most REALTORS® will be able to refer you to reputable loan officers.  Once you're provided with a pre-approval letter from your loan officer, provide a copy of the letter to your REALTOR® and let him/her know the budget that you and your loan officer have determined together.
2. Location:  Decide on the area or neighborhood you want to live in.  Consider proximity to work, schools, shopping, and other amenities.  What is important to you?  For example, do you value the convenience of being close to theme parks and downtown shopping or do you value being in a more remote location where the commute may be longer, but the area may be more peaceful and quiet?  Only you know what is important, and it is vital to research any areas you are considering to ensure it fits your lifestyle and preferences.
3. Home Size:  Determine the size of the home that fits your needs and budget.  Consider the number of bedrooms, bathrooms, and living areas that you require.  Also, consider future needs and what you will be able to realistically maintain.  For example, 6 people living in a 1,200 sq/ft home may find the living space to be a little tight.  Or, 2 people living in a 3,000 sq/ft home may find that they have too much room and spend a lot of time cleaning and maintaining unused space.  Consider what your plans are for the home in the future.  Is this your forever home or is it a starter home that you plan on selling in a couple of years?  If it's your forever home and you anticipate that people residing in the home will be moving out within a couple years, do you still purchase a larger home for short-term comfort but may require upkeep and maintenance on unused space for the long-term?  Do you plan on renting out the unused space to a roommate or do you plan on simply maintaining it for personal use or crafts and hobbies.  Or, do you decide to purchase a smaller home where a little bit of comfort is sacrificed in the short-term in anticipation for a smaller occupancy and easier maintenance in the future?  Only you can make this determination and what you are willing to pay for over the long-term based on your specific needs. 
4. Home Type:  Determine what type of home you want to buy.  Do you prefer a single-family home, townhouse, or condominium?  Do you want the privacy of a single-family home that will require you to take care of all the maintenance inside and out, or does having a town-home or condominium that includes higher HOA fees but doesn't require lawn care or perhaps includes roof maintenance and some utilities more ideal for your specific circumstances?  Consider your lifestyle, the number of occupants, and long-term goals.
5. Home Condition:  Assess the condition of the homes you are considering.  Look for any signs of wear and tear or damage that may require repairs or renovations.  Are you looking for a move-in ready home or are you looking for a DIY fixer-upper home?  Does the loan you are approved for allow for fixer-upper homes?  Is the seller willing to negotiate repairs?  Will you have the funds available to do necessary repairs after closing on the home?  Talk with your REALTOR® and loan officer to determine if the home is the best option for you.
6. Your Offer Should Make Sense:  Your REALTOR® will be able to advise you on what the market value range of a home should be based on recent comps and sales in the neighborhood.  Your offer should reflect what you are willing to pay based on the estimated home value minus repairs that you can readily see.  Work with your REALTOR® to determine if the seller listed the home accounting for obvious repairs and deficiencies.  For example, the ceiling has noticeable wet spots and shingles are missing (potential roof replacement needed), kitchen counters are damaged, blinds all need to be replaced, carpets need to be replaced, etc...  Has the seller listed the property for sale with these deficincies accounted for in the list price?  If not, your offer should reflect the estimated repair costs or repair requests because you can readily see the damage.
7. Home Inspection:  Have a professional home inspection conducted within the inspection period once you are under contract for the home.  Do NOT ever go under contract without a right to inspect the home by a licensed home inspector and a sufficient inspection period.  The inspection period is the time for you to negotiate necessary repairs that were not readily noticeable or that may have been missed on the initial walkthrough.  A licensed home inspector will complete a full inspection and provide you with a detailed report on the home and a list of deficiencies that may require repairs or maintenance.  Noted deficiencies may be negotiated with the seller for repairs or credits within the inspection period, and certain repairs may be required depending on the type of home loan you are using.  If the seller refuses to do any repairs, then the inspection period provides an opportunity for the buyer to cancel the contract, get their escrow back, and move on to other properties that may be in more desirable condition.
8. Homeowner's Association:  If you are purchasing a condo or townhome, research the homeowner's association (HOA) and its fees, rules, and regulations.  Also, keep in mind that many single-family homes are also located within HOA Communities.  Detemine if you are able to afford the HOA payments and what the limitations on the use of the property are.  
9. Home Insurance:  Home insurance is required if you are financing a mortgage.  For buyers purchasing with cash, you should also purchase a home insurance policy in order to protect your investment.  Compare insurance rates and policies and find the best coverage for your needs and to protect your interests.
10. Future Resale Value:  Consider the resale value of the home.  While buyers that are purchasing a forever home may not think this is as important...  it is!  Circumstances in life change all the time and we never know what tomorrow my bring.  While it is never guaranteed that your property will accrue in value over time due to a fluctuating economy, you can research current trends and market forecasts to help you make a sound decision.  Look for a property that is likely to appreciate in value over time, suggesting it to be a good long-term investment.

Buying your first home requires careful consideration of several factors, including your budget, location, home type and size, condition, inspections, HOA, financing, insurance, and future resale value.  Taking the time to partner with your trusted REALTOR® and loan officer, as well as researching and planning before making an offer can help ensure you find the right home for your needs and budget.