For first time home buyers, the process of finding and buying a house can feel like a big job, but it isn’t so difficult once you have a good idea of what you can expect from the process. In fact, many say that it’s a lot of fun!
When you’re shopping for a new home, every home that you visit has the potential for new opportunities and new memories in the making, and every new community promises new amenities and friends. The home-buying process itself isn’t all that difficult to navigate, either, especially once you’re familiar with the real estate terms you’ll need to know. Consider this two-part article a crash course in First Time Home Buying 101 where we’ll offer some tips for first time home buyers and go over the terms you’ll encounter as you work through the process!
First Time Home Buyer Tips:
1. Know your price point. There’s no point in shopping for houses you can’t afford (though sometimes that can be fun), but how do you know just how much you can afford? To figure that out, you’ll want to take a look at your finances and decide how much you’re willing to spend each month on your mortgage. After that, it’s a good idea to talk with your lender of choice and get a pre-approval letter before you start searching for homes in your area that match your budget.
2. Don’t fret about timing. As you search for that perfect home, it can be tempting to obsess over trying to anticipate market fluctuations and pick the best time to buy. Resist that urge. Timing the market is impossible. Even real estate professionals can’t predict what’s going to happen. Just look through the listings until you find the house that’s right for you and remember: The best time to buy is when you find the home of your dreams – not before, and not after.
3. Remember that there are advantages to buying a NEW home. While lived-in homes may sometimes offer a cheaper price tag, buying a new home can actually pay for itself in the long run with lower utility bills and maintenance costs. How? New homes are not only newer, with less aging infrastructure to break down, they are also built to be more energy-efficient.
4. Ask about personalization. When you move into a new home, you want it to be uniquely yours. When you’re buying a used home, the previous owners have probably made changes to it to reflect their own needs, lifestyles, and personalities, so think about how you might want to change it to suit your own. In the case of new construction homes, ask about the design elements you really want, from flooring to cabinets to lighting. Many builders even offer model homes or design studios where you can see the different options in action.
5. Don’t feel like you have to max out your budget. Maybe you were approved for a $300,000 home loan. That doesn’t necessarily mean that you want a $300,000 home. After all, there are also other expenses associated with the home-buying process, including closing costs, title insurance, and property taxes. Finding the home you love is more important than getting the most home you can afford.
6. Get to know the area. You don’t just live in your home; you live in the neighborhood and community where your home is located. When you tour the home you’re looking at, also tour the neighborhood. Get a feel for what your commute will be like. See if you enjoy walking in the neighborhood around your potential new home. Check access to conveniences and amenities. Are there parks and playgrounds nearby? How close is the nearest grocery store? The developers of many new home communities also add desirable amenities such as swimming pools and community centers.
Real Estate Terms to Know:
Along with our tips for first time home buyers, we’ve also included a glossary of some of the most important real estate and home buying terms that you’ll encounter when shopping for your first home. (Source)
Closing costs – As loans are processed or titles are insured, fees accrue. Rather than paying out each one separately as they happen, all these incidental fees are collectively referred to as “closing costs.” Fortunately, they usually make up only a small fraction of the purchase price (less than 5%).
Developer – If you’re buying a new home in a planned community, the developer is the person who actually does that community planning. The developer is responsible for things like common areas and amenities, while the home builder (or builders) actually build the individual homes within the neighborhood.
Escrow – Buying a house is a big investment, and selling one is, too. That’s why escrow accounts exist. Basically, they’re a place where a portion of the down payment is held by a third party (usually the title company) to ensure that both the buyer and the seller are acting in good faith. Once the actual closing date rolls around, the money is released from escrow and goes toward the actual sale of the home.
HOA or Homeowners Association – Many homes (both old and new) fall under Homeowners Associations, which are formed to maintain (and increase) the property values of a neighborhood, oversee common properties, and enhance the lives of everyone who lives there. To this end, HOAs collect dues from the residents, which are put toward things like landscaping and repair of common areas.
Home loans – Most people don’t have enough money to just go out and buy even the most affordable home outright. That’s where home loans come in. Home loans are often called mortgages, and they work pretty much like any other loan. The lender actually pays the seller for the home, and you promise to pay the lender back in installments over a set period of time.
Listings – A listing is what real estate agents call homes that are on the market. You can find listings for homes on realtor websites, which usually tell you pertinent information such as the square footage, the number of bedrooms and bathrooms, and the home’s price point.
Pre-approval letter – The first step in looking for the home of your dreams is knowing how much you can afford to spend. Part of that will involve taking a hard look at your own finances and knowing what you’re comfortable with, but you’ll also need to know how much you can probably borrow. To do that, you’ll go to the lender of your choice and get a pre-approval letter, which is an estimate of how much the bank is willing to lend. This not only lets you know how much you can afford to spend, but also tells home sellers that you’ll be able to come up with the money you need.
Property taxes – Yep, when you buy a new home you still have to pay taxes. These usually go to local and state governments to help pay for everything from utility maintenance to roads and other infrastructure.
Title company – What is the title to your home? It’s the document that proves that you actually own the property. After all, you can rent a house without actually buying it, right? So you need something to demonstrate that you’re the owner. The title company is responsible for ensuring that the title is in good standing when you buy the house, and it will transfer the title over to you once closing has happened. The title company also usually holds escrow funds during the home buying process.
Title insurance – Title insurance is usually paid as part of the closing costs on a home. It ensures that there are no liens or other outstanding problems (like unpaid taxes) on the home before you buy.
Whether you’re a first time home buyer or an empty nester looking for a new home that will match your new lifestyle, you can find the perfect home for you at Mantua, a new community offering good neighbors and an enriched lifestyle surrounded by the natural beauty of Texas. If you have any questions or would like to schedule a tour, just fill out the form below to contact Mantua today!