First time home buyers purchase about 1.8 million homes each year. While purchasing a home represents a dream come true for many, you can also stumble over a lot of obstacles in the home buying process.
After all, many homes sell for more than six figures. Rushing into a purchase of that scale can strain your financial resources. You must also consider factors like school districts, local taxes, and any renovations the home may need.
Keep reading and we’ll cover some essentials of what to know when buying a house for the first time.
Down Payments
Most home purchases require a down payment of around 20 percent. That means you must save up for a while before you get serious about picking a house. So, how much should you save up?
The average US home costs about $226,000. Multiply that by 20 percent and you get $45,200. That’s a good base number to work toward.
You should check local house sale prices since your location can push prices up or down a lot.
Home Selection
It’s a general rule of thumb that first homes are starter homes. That means you plan on eventually selling the home and getting something better.
Use that expectation as a way of tempering your home selection. Focus more on what you need from the home over the next five years instead of what you want from a dream home.
For example, do you really need four bedrooms over the next five years or will two do the trick? Do you really need a two-car garage or can you live without a garage for now?
If you plan on having kids, pay close attention to which school your kids will attend for each potential home’s location. Just because the home or neighborhood seems nice, it doesn’t automatically mean a great school district.
Financing
Financing your home buying adventure looks straightforward. You start by applying for a mortgage with your bank or a mortgage broker, right? You will likely apply for a mortgage, but first time home buyers have extra options they should explore.
Most states and the federal government-run programs specifically designed to assist first time buyers. You can often get:
- Low-interest loans
- Tax incentives
- Grants
- Down payment assistance
All of these options can make your first home purchase more affordable.
Parting Thoughts on What to Know When Buying a House for the First Time
What to know when buying a house for the first time does depend a bit on your location.
In urban areas, the neighborhood matters a lot and prices trend higher. Rural home prices trend cheaper, but you get little say in things like a school district.
In general, pick a first home that you can afford and meets your projected needs. Worry about securing your dream home when you get ready to settle somewhere for the long-term.
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