My husband I were 23 when we purchased our first (and current) house. We were very young and very excited home buyers. Despite having student loan debt, we were determined to follow our dreams and become home owners. When the time came to get serious about buying a home, I was a little overwhelmed. There are so many things to consider as a young, first time home buyer. Here are a few things I wish I knew before I started house hunting:
1) Closing Costs
Closing costs are the fees charged by lenders for the purchase of the home. Closing costs are not cheap! They can cost up to 5% of the selling price of the house. Just keep this in mind when you are getting ready to purchase a house and trying to calculate how much your mortgage will be. I think it’s easily overlooked during the process.
You can’t really avoid closing costs but they can be a great bargaining chip when negotiating an offer. When we purchased our house, the sellers would not budge on price but they did agree to cover closing costs. Score!
2) Repairs and Maintenance
I did some research and discovered that most people say to budget about 1-2% of the selling price of the house each year for repairs and maintenance costs. After two years of being a home owner, this estimate has been pretty accurate. Over the last two years we’ve re-coated the wood floors, replaced the washer and dryer and water heater. There are still many things I would like do including a kitchen and bathroom remodel!
The key point to remember is that you will be paying more than just your mortgage each month for your housing costs. When you are trying to figure out how much house you can afford, make sure you budget for repairs and maintenance.
3) Getting Qualified for a Mortgage
Despite only having a few months of work history and a boatload of student loan debt, we were shocked with the amount of mortgage we had been pre-qualifed for. It was a lot more than we were planning on spending. For a split second I was excited thinking about what a nice house we could get.. Maybe we could get that three car garage and finished basement after all. Then I came back to reality.
Don’t be tempted to live beyond your means just because a mortgage company is willing to give you a “big” loan. Remember lenders don’t know your budget or how much you can afford. Only you know what is best for you and your family.
4) Get advice from people you trust
Getting ready to commit to buying a house and all the responsibilities that come with being a homeowner is a big deal. It’s stressful and overwhelming. I highly recommend that you take advice from people you trust. When we found a house that we liked, we asked my parents to come with us when we went to a second showing. I was shocked at all the things my parents noticed about the house. “Liz did you see that crack in the ceiling? It looks like water damage.”
My parents are experienced homeowners and it seemed like they had a trained eye for looking at houses. At 23, my husband and I knew nothing. Make sure you can find someone you trust for both advice and support during the home buying process.
Are you getting ready to buy your first home? If you already own a home, what is one thing you wish you would have done differently when purchasing your first home?