More Americans are purchasing homes than ever before with the number of homeowners increasing by an estimated 2.1 million in 2020 to now hit 84.9 million in total, Pew Research reports. When it comes to purchasing your first home, it’s important to stay in control of the process and not let stress or emotions impact your decisions. By being careful and avoiding common pitfalls, you’ll end up purchasing a home you love at an affordable price.
Shop around
It’s important to shop around to make sure you don’t quickly purchase a property with a particular compromise that will end up becoming a major problem later down the line. For example, don’t opt for a budget-friendly condo that’s more affordable than a house when you already know you don’t enjoy apartment living. Similarly, although purchasing a fixer-upper can be cheaper, only do so if you’re certain you have the necessary skills and can spare the time and money. Keep in mind, if you start the work and later realize you need professional help, the cost of labor will probably make the project double your initial estimates. So, although affording your first home will likely involve a degree of compromise, don’t cave on important issues. Prolonging your property search will prevent you from making impulse decisions that may come back to haunt you.
Consider financing options
It’s important to research your different options when it comes to loans to find what suits your financial situation best. For example, an FHA loan (insured by the Federal Housing Administration) is designed to help those with limited savings or poor credit scores purchase a home. A minimum credit score of 500 is required for FHA loan eligibility, along with a larger down payment. Alternatively, if you’re a veteran, you can check if you qualify for a VA loan. Partially backed or guaranteed by the Department of Veteran Affairs, VA loans help individuals purchase a home with a 0% down payment, great rates, and no Private Mortgage Insurance needed. Your loan eligibility depends on you meeting one or more requirements, such as, having 90-consecutive days of active service during wartime.
Having vision is key
A successful property search ultimately relies on having vision: the ability to recognize what’s fixable and what’s not. Small yet fixable imperfections like ugly wallpaper or bad lighting shouldn’t necessarily lead you to reject a property that otherwise meets your requirements in key areas that are difficult, expensive, or impossible to change (like size and location). Similarly, don’t be swayed by any cosmetic improvements and basic upgrades done solely to justify increasing the purchase price. DIYing upgrades (or hiring a contractor) is usually more affordable than paying for the increased home value that results from having the improvements already done for you.
Purchasing your first home is an exciting yet stressful and expensive journey. By being sure to shop around, consider your financing options, and develop vision, you can better avoid common mistakes and ensure you end up with a great home at an affordable price.