9 Expert Tips for First-time Homebuyers

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Updated on Monday, February 8, 2016

9 Expert Tips for First-time Homebuyers

Buying your first house can be an excellent test of patience, endurance and resilience. If you’ve never been through the process before, it can certainly be an intimidating one. From scary terms and bidding wars to that tiny matter of plunking down a whole heck of a lot of money for a down payment, most people who are buying their first homes could stand to use a little help along the way.

We’ve tapped into some experts from across the country to find out what their top tips are when helping first-time homebuyers find and purchase their dream houses. Use some of these whenever it’s your turn to take a ride down Homebuyers’ Lane.

Tip No. 1: Determine a comfortable budget

Expert: Russell Vilt, Managing Broker & Owner Excel Condos, Chicago, IL

What it means: Nothing can be done when it comes to buying a home without first understanding your budget. “I always suggest speaking with a lender who can help determine their buying power,” says Vilt. “The sales price of a home is not the only expense, so they need to be aware of taxes, assessments (if it’s a condo), homeowners’ insurance, etc.”

A tip from MagnifyMoney: be sure not to let a mortgage lender or realtor talk you into buying more than you can truly afford. Just because you get approved for a $300,000 mortgage, it doesn’t mean you should get a $300,000 house. You should also learn how to hack your way to a cheaper mortgage.

Tip No. 2: Get pre-approved by a lender as soon as you think you want to purchase a house

Expert: Rhonda Fee, broker/realtor, Aspire Realty Services, Pleasanton, CA

What it means: Pre-approval will be your road map for a successful purchase, which is why it’s so important to get this part rolling right away. “Understand what bills need to paid off, and how much down payment you’ll need,” says Fee. “The lender should be someone they have been referred to by a friend who had a successful transaction with that lender, or … a realtor. A lender can kill a deal if they are not on top of their game.”

Tip No. 3: Know what loans are available to you

Expert: Tory Sheffer, realtor, Berkshire Hathaway HomeServices, Michigan

What it means: Sheffer has come to realize that most first-time homebuyers tend to know the basics about buying a home — like what a mortgage is, for example — but that’s about it. “They aren’t aware of the different options available to them with Conventional, FHA, Rural Development and 80/10/10 Piggyback loans to help buyers who do not want to pay Private Mortgage Insurance,” he said. To help, Sheffer makes sure to take some time and explain to his clients the difference between these additional options. For example:

  • Rural Development is a zero down payment program
  • FHA is a 3.5% down payment
  • 80/10/10 is a 10% down payment with 10% as a second mortgage to avoid PMI, which in turn lowers the monthly rate, more often than not
  • Conventional Mortgages are not insured by the federal government, but more often than not PMI is required until the buyer has built 20% equity in their home. Learn more about why you should aim for a 20% down payment.

Ask your broker or lender for more specific information about each. 

Tip No. 4: Find an agent you trust, and don’t be afraid to shop around if your agent isn’t meeting your needs

Expert: Leize Gaillard, agent, William Means Real Estate, Charleston, SC

What it means: As with any other large purchase you would make, it only makes sense to shop around for your best options. “I find that the agent/buyer bond is particularly strong with first-time homebuyers,” says Gaillard, “as the buyers often need extra detailed explanations of each step in the process. This certainly takes more time, effort and patience on the part of the agent, and not all agents are naturals in this department.” It’s important to feel comfortable with your agent, like you can ask questions and get reliable answers, and a patient agent will work hard to earn your trust and business, and will stick with a first-time buyer without making them feel rushed. 

Tip No. 5: Don’t fall in love with houses you see online

The expert: Wendy Roudybush, Broker, Jamboree Homes, Colorado City, CO

What it means: Unfortunately Roudybush has seen it happen all too many times — a first-time homebuyer finds something online that looks great, falls in love with it, and then is disappointed when seeing it in person. “It can be very different in person,” she says. “Also, when looking at houses, don’t make snide comments about the house in front of the seller or the seller’s agent — it won’t endear you, and it could make it difficult to get your offer accepted. Understand how the real estate industry works.” 

Tip No. 6: Unless you have lots of extra cash, forgo foreclosures, auctions and bank sales

Expert: Leize Gaillard, agent, William Means Real Estate, Charleston, SC

What it means: Gaillard says she is often presented with first-time homebuyers who expect to get their dream home for 20% or more under market value through a foreclosure, auction or bank sale — but there are stipulations with these types of sales. “What these buyers don’t understand is that by the time homes have reached the open market, they have been left vacant in poor condition for some time,” she said. “Simply getting them back in reasonable habitable condition could take thousands of dollars in maintenance work. It isn’t to say there won’t be some good foreclosure deals out there, but in general, if it looks too good to be true, it probably is.” 

Tip No. 7: Visit at least 20-30 properties in person before making a decision

Expert: Ari Harkov, Harkov Lewis Team at Halstead Property, New York, NY

What it means: There are many factors that go into determining your perfect home, and it takes a developed eye to pick up on them. “Price, neighborhood, immediate street, size, views, condition, monthly carrying costs, etc.,” says Harkov, are all factors to consider. “Searching online is incredibly value, but nothing replaces in person visits. Taking the time to visit numerous properties through private appointments and open houses will allow you to confidently narrow in on your preferred criteria and make an offer with confidence once you do find a home that you love.”

Tip No. 8: Don’t be afraid to look everywhere

Expert: Will Johnson, realtor and founder of the Sell and Stage Team, Hendersonville, TN

What it means: It can be intimidating to check out houses the first few times, but just remember how much money you’ll be spending if you were to buy the place, and use that as incentive to put your nosiest foot forward. “Open drawers, cabinets and closets to see how much storage space you really have,” says Johnson. “Turn lights on and off. Walk down to the basement or up to the attic and look for smells and leaks.” On the other hand, Johnson says to remember that there are elements about a house that you can change. “Don’t miss out on a great house because you don’t like the paint or the appliances,” he said. “These are small parts of a bigger picture. Try to imagine the house as your own.”

Tip No. 9: Read your contract

Expert: Will Johnson, realtor and founder of the Sell and Stage Team, Hendersonville, TN

What it means: While it might seem like a bunch of “standard legal jargon,” you need to understand everything that’s in your contract, says Johnson. “If you’re confused about something, ask your realtor or attorney.”