Are you freaking out about the current residential market? Lately, I wake up wondering if my adulting kids will move back home to save money to purchase their first home or an RV. Or maybe we will be a short-term landlord between selling and buying. Either way, I decided to calm my own mind to create a shortlist of strategies and tips for first-time home buyers. These tips apply to all home buyers.
I have three children and I have visions of my kids moving back home to save money to purchase their first homes.
Sidenote: This was our daughter’s first home. Her dad was the builder. Clearly, she was not happy with the walkthrough. I think she had a punch list for him. I wonder if she found a roof leak?
Over the course of sleepless nights, crazy low inventory, and an uptick in mortgage rates I created a list of strategies for first-time and third-time home buyers.
These tips are great for homeowners who have not bought a house in ten years.
STRATEGIES FOR FIRST TIME HOME BUYERS
- REMAIN CALM Take a breath. Use this time for more properties to come on the market. It will happen. The market always adjusts. Enjoy the luxury of no home ownership headaches as you get your ducks in a row.
2. INTEREST RATES I am not a lender. The key is to meet with a reputable lender and get your loan application documents in order.
Provide a conservative number for what you are prepared to spend in a monthly mortgage payment. I never want my buyers to keep inching up in price. If the home you want is not available in June it will be available as inventory picks up. Talk to your lender about fees and ways to lower your interest rate.
Avoid the temptation to look at homes on the high end of your budget.
Hopefully, as inventory picks, buyers will not feel the pressure to submit crazy over asking price offers, appraisal gap coverages, and offers to pay the sellers’ children’s first year of college tuition. The stories are crazy! And many are true.
3. REVIEW TERMS AND THE PURCHASE CONTRACT
I like to review a contract with my first-time home buyers and explain dates and deadlines and the section under additional provisions.
Make sure buyers understand what a post-occupancy agreement is and who typically pays this “rent back” after closing.
4. START DRIVING
- Narrow down the radius and/or the zipcodes of a search
- Pay attention to the parks, shopping, lighting, sidewalks, light rail, weekend and weekday activity and traffic patterns.
- Make the drive to and from the neighborhood to the office office during commute times.
- As you narrow your search drive the neighborhoods on the weekends
- Are there pumpkins outside in the middle of March? Are there Christmas tree lights on the trees in April?
- What is the parking situation? Is there restrictive parking on certain days/months?
- Pay attention to HOA fees and taxes in the listing description.
- What does the HOA include?
- How far is the commute to the airport (Uber + parking adds up).
Do your homework! Your lender will assist you with these anticipated and unanticipated expenses. It never fails-something breaks, leaks or smells the day after the closing (despite the inspection).
HOME OWNERS INSURANCE
TAXES (listed in the MLS)
PRIVATE MORTGAGE INSURANCE
MOVING HOME (TEMPORARY)
Oh, moving back home with the ‘rents is usually met with dread for buyers. Believe it or not parents don’t always love sharing the couch after dinner.
Juggling leases, closing dates, seller rent backs make a move home a viable option.
And no you can not ask the sellers if you can stash your stuff in the garage. No!
Here is the advantage to moving home for a wee little bit.
Your kids, relatives, niece can save money!
This photo was on her daughter’s first day at a big 4 accounting firm. She saved most of her salary the year she lived at home. She used the time to study for her CPA too knowing her mom was making her amazing meals every night. ;0)
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I get to use both sides of my brain most days.
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