1 – Invest time in getting the lowest interest rate possible
After getting rates from 3 companies that were roughly similar, I was ready to call it a day and move on with a 4.0% interest rate. If it wasn’t for my family friend who had a contact at another bank that I never would’ve considered, I would’ve lost out on one of the lowest rates our there — 3.65%. And that makes a huge difference in the long run because as your work towards paying off your home, getting a lower rate means less money that you’ll be paying to greedy banks over the course of the loan. Use comparison websites to get a quick sense for the different rates out there:
- Nerd Wallet
- Investigate rates from credit unions as well
- Ask friends/look online (ie. Reddit) to see where people have been finding the best rates lately
- Consider Costco — costcohomefinance.com
2 – Inspect before you make your offer
Hire an inspector & inspect the property even before placing an offer, especially if you sense there isn’t too much demand for the property. Even though it’s great to not lose out on a great condo or home, you may end up having some unnecessary regrets if you place a high offer based on the perceived value of the home. Many times, people wait to inspect after they’ve already placed the offer, and then there’s a lot of angst and back and forth trying to negotiate the price of the house down. Knowing all the information up front prior to having any money on the line or contracts in place takes the stress off of making the most rational decision possible. It also accelerates the remainder of the process since the buyer won’t need to wait for your inspection later on.
3 – Determine the cost of any renovations/upgrades you may want to make prior to purchase
Most homes are not bought 100% perfect; there are always a few modifications you have in mind. Try to find a contractor or handy man who is familiar with your city’s market so they can help you estimate the cost of the changes you’d like to make. When you do this, assume the worst case scenario because renovations always end up way more expensive than originally planned or if you don’t have a number, just add an extra 20% cost on top of the estimate for an upper bound. This will help you crunch the numbers to understand whether the proposed value of the house + renovations makes sense for you.
4 – Rule out all and any doubts before you finalize the sale
If there are any lingering questions or concerns, make sure the seller has fully convinced you that the risk is non-existent. For example, is there any lumpy ceiling that looks like it could be water damage? Is there any worry/evidence of mold? Everything major highlighted in your inspection report should be dealt with; do not succumb to pressure to simply purchase the place just because your lender, the seller or agents say so. This is major.
5 – Do not make decisions alone
Even if you are buying a place alone, the value of having another eye, even if they don’t know anything about home purchasing, is vital. The way you look at home once you have a friend or relative criticizing it can provide some new insight or validate a gut feeling you had but weren’t sure about. It will also give you a sneak peek into whether you feel a sense of pride to have someone you care about visiting or whether you may actually feel insecure or doubtful once you have someone visit.
6 – Focus on your total monthly payments, not the cost of the house
Ultimately, each $x increase in the home prices only increases your monthly payment by $y. What this means is that you don’t need to disqualify that home you love so much just because it’s $15,000 more. In the grand scheme of things, the only thing you should care about is whether you can afford to comfortably make your total monthly payments. Often, your lender will be able to help you make these calculations, however, you can also use several online tools as well. Here are a couple:
7 – If you can afford to, avoid fixer uppers
Even though people may have told you or you’ve seen the trials and tribulations on HGTV, believe me when I say renovations are the absolute worst. Emotionally and even sometimes financially, you are better off paying for the pricier, newer home that has most of what you want already. Doing a fixer upper requires a lot of emotional and time investment that sometimes you simply may not have. It eats into your time at work because you end up being on the phone with contractors throughout the day; it becomes like a 2nd job because they’re often inconsistent, poor communicators and inefficient. And so you become a part time project manager to make sure things are moving along. And even then, your project will be late, guaranteed. Contractors are players.
If you end up deciding to go with a fixer upper regardless, then make sure you’ve done your research to find the most reliable contractor in your area. The best way to do this will be to scour your personal network for references, but you can also use some online tools:
8 – Do not be afraid to negotiate
Unless you’re 1000% confident this home is the home of your dreams, don’t let the fear of losing the home scare you into negotiating poorly. Go as low as is reasonably possible! Worst case scenario, the seller disagrees and you keep looking elsewhere. What you don’t want is to buy a home at a price that you will regret. That is the price you will be paying off for the next 15-30 years, so don’t be afraid to get it as low as possible. Typically, the seller needs to sell more than you want to buy.
9 – Spend more time finding a competent & hard-nosed buying agent
I made the mistake of working with an agent simply because she seemed friendly and professional. This was great while I was looking, but once I found a place and started negotiating, she was too afraid of the seller to push hard on things that I really wanted. This was an extremely frustrating experience to have with the biggest purchase of my life. So make sure you find a buyer who isn’t afraid to push for you, even if it means dropping the home sale and looking at other options.
10 – Buying your first home is incredibly emotional, especially if you’re going at it solo
I was shocked by all my tears and anger that came up and down throughout the whole process. I expected to feel simply happy from beginning to end because buying a home is something I had always dreamed of and worked towards. However, the happy part ended as soon as I decided to put down an offer, because my whole bank account was now on the line. Even after buying the home, I had to work through a lot of buyer’s remorse, and it wasn’t until I started to see some of the renovations come into place that I started to re-gain confidence that I’d made the right decision. It’s 100% an emotional rollercoaster. There isn’t much you can do you mitigate it, but it’s helpful to just know that you aren’t crazy! Buying property isn’t all happy-go-lucky, so you’re right to feel everything to feel from beginning to end.
Buying your first home is freaking exhausting.
I got to a point where I didn’t even care anymore and wanted to abandon the effort simply because of how inefficient the process can be and how draining the whole process is. Especially if you’re combining it with a demanding job. However, don’t give up! Find your allies and supporters and have them go through your journey with you. It will help you get to the finish line, and I promise, at the end of it all you will be glad that you persisted!