A home. Your home. Want to paint the walls purple? Go ahead. Want a pair of golden retrievers? Get 'em. Want to rip up the carpet and start over? It's up to you.
For most people, the greatest thing about owning a home is just that ... it's yours! You get to make the call. You also get the responsibility. But with that responsibility are some privileges, such as tax advantages and investment building.
If you've never owned a home, just thinking about first-time homebuying can be a bit overwhelming. The process can be frustrating -- but also exciting. You probably have questions and concerns. So we're here to help you as you explore the possibilities.
We've laid it all out here - the advantages, the responsibilities, the pros and the cons and a little insider advice, too.
Read, print, save, share. We hope this first-time homebuying information helps you as you decide if homeownership is right for you.
Renting and buying are distinctly different experiences. You may already know some of the reasons you'd like to buy your first home. Or maybe you have some reasons for wanting to continue to rent.
It helps to consider both sides before you make a decision. After all, buying a home is most likely the biggest investment you've ever made. Renting or buying - which is better for your current situation? Only you can make the decision that's right for you. Check this chart for few factors to consider and be sure to talk with a Realtor® about your options.
You're seriously considering buying your first home. It would be really great to have a place to call your own. But do you understand why buying a place of your own is a smart idea?
- It's yours. In your home, you can do what you want - decorate to your own taste, crank up the music, turn all the lights on, paint the walls any color you like. You have freedom.
- With a mortgage, you pay yourself. When you rent, you are basically helping your landlord pay his mortgage payment and taxes, with no benefit to you. When you buy your first home, you are your own landlord. You reap the benefits.
- You'll have tax deductions. As a homeowner, you can deduct mortgage interest, property tax, sales tax and mortgage insurance premiums. You will be pleasantly surprised come tax time.
- Your investment appreciates. Since 1950, real estate has been a safe, steady investment. In the past decade, it has appreciated 35 percent while stocks have lost or gained very little. The return on your investment may not be immediate, but you'll see a return over time, and you can enjoy your home now. Learn more about Allen Tate Mortgage.
Good question. You'll hear this answer over and over. You DO need a Realtor® when buying a home. Here are a few reasons why:
- Realtors have professional training and experience and subscribe to a strict Code of Ethics. You've never done this before, and the process goes smoothly when you're working with someone who knows the ropes. Your Realtor is your advocate.
- Realtors know the turf. They're familiar with neighborhoods and communities and can give you helpful information about places you might want to live.
- What's a good price? What kind of offer do I make? A Realtor knows price and can advise you as you make that offer.
- How's the market? Your Realtor knows. How to buy, when to buy and who's buying ... all that's important when you're looking to purchase a home. Realtors stay on top of it, so you don't have to.
- You've found your first home. Now, it's time to negotiate the price, decide on a closing date, decide which appliances stay, what repairs must be done before you buy, who pays closing costs, etc. Negotiation is part of a Realtor's service. You'll be happy to have a Realtor when it's negotiation time.
- Buying a home isn't a handshake deal. There's a mountain of paper to wade through - offers, contracts, addenda and disclosures, to name a few. You'll sign your name over and over and over. Realtors know what you're signing and why and can explain it all to you.
- You'll be working with inspectors, attorneys and other professionals. Your Realtor knows people who can do the job competently and will make recommendations, saving you lots of time and worry.
- After closing, you may have questions about taxes, home improvements and more. Your relationship with a Realtor doesn't end at the closing table.
- A good Realtor is an advocate and a trusted advisor. Especially when buying your first home, it helps to have someone you can trust to guide you through the process. Find an Allen Tate Realtor to meet your needs.
- Take a look at your current budget and savings. Can you afford a house payment and all the expenses that go with owning a home? Remember, homeownership is a privilege, not a right. Talk to a mortgage broker about what you can afford.
- Use a Realtor®.
- Don't assume you can't buy a first home just because you don't have a large down payment.
- Buy in an area with good schools. It gives you a resale advantage.
- Research taxes, recently sold properties and zoning/land use changes. Sign up for Market Report at allentate.com for the areas you're most interested in.
- Visit the neighborhood you're considering at different times of the day.
- Bring a pen and paper, camera and tape measure when looking at houses. Don't rely on your memory - if you look at a lot of homes it can be confusing.
- Ask your Allen Tate Mortgage consultant about opting for a lower interest rate over paying points. It could save you money in the long run.
- Find out if there is a homeowners association and learn about the fees and rules.
- Bring your own experts - your friend, your mother, a contractor - to offer opinions and look at your favorite home from another point of view. But keep in mind, it's your first home, not anyone else's, so you have to like it.
And three bonus tips for first-time homebuyers ... just because we like you!
- Talk to the neighbors. Ask how long they've lived there, what they enjoy about the neighborhood. Ask them what they wish they'd known before they moved in.
- Don't buy if you can't stay put for at least a few years. You need time to build equity.
- Talk to your Allen Tate Insurance agent. Get an idea of the difference in rates from area to area, single-family vs. condo and find out what they'll need from you. This will save you time when you're anxious to close the transaction on your first home.
Considering your first home purchase? There's never been a better time.
- Mortgage rates are near historic lows. In the last 30 years, rates have been as high as 16.5 percent. Today's lower rates mean a big difference in your mortgage payment - on a 30-year, $125,000 loan at 6.5% the monthly payment would be $790. At 4.5%, the payment would be $633.
- Inventory is high. More homes out there, more selection for you.
- Sellers are motivated. With a lot of homes on the market, sellers are being realistic in pricing and negotiating. The time is right to make an offer on a first home.
- Rental prices are going up. Many economists point out that it's often less expensive (in terms of your monthly cost) to buy a home these days than to rent one.
When it comes to buying new construction for your first home, there are several key players to a successful transaction.
The first is your Realtor®. A Realtor can help you find and compare different communities, builders and floorplans. Once you've made a selection, your Realtor can help you negotiate the contract, explain the process and be your advocate throughout the transaction.
The other member of the team is the on-site sales agent. This agent is the expert on the community and can answer questions specifically about the home you're considering. Once you make a selection, the on-site sales agent, who works for the builder, can help you make flooring and lighting selections and write your sales contract.
Using a Realtor will not affect the home's price. The seller (or builder in this case) pays the buyer's agent (that's your Realtor). The cost of buyer representation is paid by the builder. Using a Realtor as your representative in this transaction won't increase the price of the home, nor will not using a Realtor reduce the price of the home.
Buying a home is likely the biggest investment you will ever make. It's a good idea to have a Realtor on your team.
Your Buyer's Agent works for YOU. It's in their best interest to get to know you and what you're looking for, answer your questions, and walk you through the process. Only after you've closed on a home does your agent get paid. However, professional Realtors do sell homes to make a living, so they do get compensated following a successful transaction.
You do not directly pay the Realtor. Usually - but not always - the Realtor is paid from proceeds received by the seller. It's all part of the selling price of the house, so this is not part of the money you will bring to closing. While this is a common industry practice, your Realtor should advise you well in advance if there could be a deviation from the norm.
If you go through the process and decide not to buy, you have no financial obligation to your agent.
It's time to get started! Here's some tried-and-true advice to follow as you start along the path to homeownership.
- Check your credit score. The better your score, the better your interest rate. A score of 720 to 740 may be required to qualify for the lowest rates. A score below 620 may not qualify for a mortgage until it can be improved. (Tip: If you aren't paying all your bills now, your chances for getting a mortgage aren't good. Consider Allen Tate's Prepared Buyer program to help yourself get in a position to buy your first home.) Learn more about the Prepared Buyer Program.
- Set your housing budget. A lender will tell you how much you can borrow, based on your income and debt. But you must determine how much of your household budget you are willing to allocate to your mortgage. Financial experts recommend about 30 percent. Keep in mind you'll have utilities, taxes, homeowner association fees, insurance and maintenance costs, and you'll want to buy furniture, window treatments, landscaping, etc.
- Start saving and stop spending. Once you determine your potential mortgage payment for your first home, start saving the difference between that payment and your current rent each month if the mortgage is less. If it's higher, start setting aside the additional amount as well.
- Meet with Allen Tate Mortgage. Get prequalified to determine how much home you can afford. You may be surprised how far your money will go in today's market. Also, it's never too early to learn about the process and what information and finances you will need to move forward.
- Find a reputable Realtor®. Even if you are a year away from buying a home, interview several Realtors and find one that is knowledgeable and familiar with where you want to live. It's also a good idea to find a Realtor you are comfortable with and trust. A Realtor earns money only when they buy or sell a house, but they are willing to earn your business by working for you well in advance of your purchase. Start your search for an Allen Tate Realtor.
- Narrow your priorities. It's easy to put everything on your "wish list." But you must determine what's most important to you - neighborhood, style of home or features - and make your priority list.
- Choose a neighborhood. Learn about home values, recent sales, schools and other neighborhood demographics. Allen Tate Market Report and Community Profile are great resources.
- Make a reasonable offer. When you find a home you love, make a fair offer. Your Realtor can help advise you what makes sense and provide information on comparable homes in the area
- Have a home inspection. Never buy a home without having it inspected by a professional. This will alert you to any flaws in the home, as well as a timeline to repairs that will be needed in the future.
- Finalize the details. Once you've put a contract on a first home, stay in close contact with your Realtor and mortgage lender. Contact your insurance agent to secure homeowners insurance and consider a home warranty to help cover any unexpected issues.