As a first-time homebuyer it is easy to get overwhelmed by all the choices and sacrifices that need to be made when getting into your first home. However, homeownership has many important financial benefits once you secure your first property. For example, as you continue to make payments on your mortgage, you are actually building your equity. This means that you will have access to capital that thousands of other Americans only dream of. Even better is the fact that owning a home will likely help you build capital quicker than your average savings account, thanks to the appreciation on your home.
When you head down the path of homeownership for the first time it is inevitable that you will be faced with an array of decisions related to what amenities you have to give up in order to afford it. This initial step is a huge financial commitment for anyone; and, unless you have endless access to capital, there are bound to be specific aspects of the home that you will have to sacrifice in order to afford your first purchase. These can come in the form of choosing between an extra bedroom verse an office, the size of the backyard, or an extra bathroom.
Get the Home That’s Right for You
When searching for your first home there are many things to consider to ensure that it fits your life and your future goals. This can be contingent on many factors depending on what stage of life you are in. For example, newlyweds purchasing their first home will have vastly different needs than a family who is transitioning from a rental into their first home. Consequently, putting together a list of your “must haves” is a good place to start when purchasing your first home. Once finalized this list of must have amenities will help you quickly sort out the homes that fit your criteria and are in your price range. Basics requirements and minimums to include on your list are:
• Number of bedrooms
• Number of bathrooms
• Laundry room and hookups
• Garage and number of cars
• Required storage space
• Front and back yard size
Find a Good Location
Now that you have an idea of what home will fit you best, it’s time to start looking at available properties. Since you narrowed down the size and amenities you need, location is going to be the next most important factor in the decision making process. To start, it’s the only thing about a home that you can’t change, so it’s important to get a location that works for you. Being a first time homebuyer might mean that more sacrifices will need to be made, but that doesn’t mean you have to settle for a home that isn’t a good fit. When shopping for your first home remember to identify your short-term and long-term goals for the house. For example, is the home an investment property that will be sold later when the need for more space arises or do you need to look for a property with room to expand? Once you have an idea of what your future goals are you can more easily narrow down your options. Important factors to consider when determining location are:
• Crime rates
• School districts
• Community development
• HOAs, fees, taxes, and Mello-Roos
• Commute time
• Proximity to green spaces, parks, shopping, dining, and entertainment
Invest in Your Future
For a first home that will be sold in the short term look for locations that will maximize your potential return. Fixer uppers can be a good way to work your way into a better neighborhood, for instance. Also consider the potential of keeping the home to rent when it’s time to move into your second home. Neighborhoods close to schools, tourist attractions, and large corporate headquarters make great rental properties.
For those who plan to stay in place for the long term it is also important to consider the neighborhood. Growing families should remember to find a home with as many parks and recreational activities nearby. Do a little research on the local schools so you can settle within the highest rated district. As mentioned before, it’s okay to get a smaller home or a fixer upper in the best location you can afford, just ensure that you have some room for expansion. It can be cheaper to build out extra rooms and bathrooms on your existing home when the need for more space arrives.
In either situation, a little practical research on the areas where you want to purchase is a good idea. The internet can be a powerful tool to research things like crime rates and the quality of the school district. If you are getting close to a final decision and you live close to the area you intend to move to, then it is definitely worth getting to know the neighborhood in person. Visit at different times of day and on different days of the week to ensure that the neighborhood doesn’t change for the worse on nights and weekends; additionally, noise, traffic, and parking can be assessed at different times as well. Also consider circling the block and walking around. This will help you get a sense of the area and ensure that there aren’t any unwanted surprises around the corner, like abandon warehouse or industrial space.
By doing a little preplanning, a first-time homebuyer can be more confident that the home they select is a good fit for their life’s ambitions. Plus, making good decisions on a first home will give you financial advantages in the future when it comes time to purchase your next home.