8 Things First-Time Home Buyers Never Realize
For starters, mortgage calculators are the devil
Cue the financial curveballs--they’re to be expected as soon as you decide you’re ready to buy your first home. That’s why we checked in with Gabrielle Daniels Henken, a real estate agent for Coldwell Banker, to help prep you for the process. Here, eight things first-time buyers often never realize.
YOU MIGHT BE ABLE TO WORK WITH AN AGENT FOR FREE
The laws and processes are different everywhere, but in most states,real estate agent fees are paid by the seller, not the buyer. That means you can actually rely on the expertise of a pro without worrying about exorbitant costs when it comes time to pull the trigger.
ONLINE MORTGAGE CALCULATORS ARE A FALSE FRIEND
Sure, they’re an excellent starting point, but you’ll need to speak with a tried-and-true mortgage professional to really have a clear understanding of what you can buy and what kind of rates you can expect. (A flush bank account, for instance, might get you a better rate; a poor credit history, however, could dock you points.) Make an appointment and talk it out with a reputable lender to find out where you really stand.
IT’S SMART TO PUT YOUR CREDIT CARDS ON ICE
We get it. It’s super tempting to blow your budget on that new couch from CB2. But you should probably wait until you’ve moved in before you start racking up brand-new debt. Here’s why: Lenders have the right to check your credit up to the day of closing. This means it’s best to steer clear of any big-time purchases that could ding your bottom line.
You’ll get hit with lots of hidden costs
Beyond the down payment (usually about 20 percent of the purchase price), it’s pretty standard that you’ll have to make deposits when you submit your offer and when you sign the purchase and sale agreement, and you’ll also have to cover the fees for the home inspection (anywhere from $300 to $500) and closing (typically 2 to 5 percent of the purchase price). Plus you’ll have to shell out for your agent or lawyer, where applicable. The bottom line: Price it out in advance and make sure you’ve got some extra cash in the bank.
THE ONLY NONNEGOTIABLES ARE THE THINGS YOU CAN NEVER CHANGE
Remember, you can swap out the plush carpeting and paint colors. You can’t change the location, the backyard or the floor plan (well,not without serious permits).
PAYING THE ASKING PRICE DOESN’T MEAN YOU’RE OVERPAYING
A smart seller heeds professional advice when listing their home. That’s why you should focus less on getting a “deal” and more on getting a grip on what you feel is fair market value. If the asking price is on par with what you expected, it’s A-OK to offer that.
YOUR OFFER ISN’T JUST ABOUT THE MONEY
Yes, the seller wants to know you can actually pay and that you can afford to make a decent down payment (the higher, the better). But there are other things that factor into their decision. For example, flexibility with the closing date could be more valuable than an offer that’s $5K higher than yours. It also doesn’t hurt to send a letter communicating how much you adore the house and then be super speedy signing all paperwork and docs.
THERE’S NO SUCH THING AS A “PERFECT” HOME
We know. You want the picket fence, the double-sink bathroom, the easy commute, the right school district and the breathtaking view that doesn’t look directly into your neighbor’s kitchen. But remember: No home is going to check all of your boxes. Rank your must-haves and dream features, and then be prepared to compromise. The right house is the one that comes to you at the right time.