Recent homebuyers share some of their toughest lessons learned.
Sometimes, there’s nothing worse than buyer’s remorse. Especially when it involves the most expensive thing you’ve ever purchased with no ability to return it (even if you had a receipt).
Buying a home is a huge undertaking that will change your life, but it’s not something that should be done before educating yourself on the process. We spoke to a few recent first-time homebuyers about the greatest lessons they learned and what advice they would offer a friend if he or she was about to embark on the home-buying adventure.
1. Be prepared for the long haul
The housing market is tight and competitive; there’s not enough inventory and the houses that are available for sale typically receive multiple bids within days of hitting the market. It’s important to understand you might not get a house right out of the gate.
“I got outbid four times!” says Erin Musto of Littleton, Massachusetts. “It was frustrating and discouraging. I would offer over the asking price and still get outbid. I actually got outbid on the house that I ended up purchasing, and with the help of my real estate agent, I was able to be there when the first buyer backed out.
Musto says it took two years of house hunting to find the perfect one, and encourages any new buyers to be patient and not to settle. “Look at a lot of different houses, even ones you don’t think you’ll like. Weigh all your options,” she says.
2. Understand the preapproval and loan process
If you’re buying the house as a single person with no co-signers or anyone else listed on the mortgage, you’ll only have to worry about your own credit record. Keep in mind though, if you’re recently married or plan to share the loan responsibilities with someone, your lender takes both of your credit scores into consideration. Make sure your overall credit-to-debt ratio is within the acceptable limits determined by your lender.
After finding a house, paying for a home inspector and preparing to close on the sale, Eugene Kim of Madison, Wisconsin, got the rug pulled out from under him. His wife had recently co-signed on the refinancing of her mother’s home in Seattle, which affected their credit-to-debt ratio.
“We didn’t understand those implications; we shouldn’t have been preapproved,” Kim says, adding that they ended up buying the house with cash borrowed from family members. “You need to research the process of getting a loan. I wish I wasn’t so naïve.”
3. Work with an experienced Realtor
It may come as a surprise to some first-time homebuyers that not all real estate agents specialize in buying a house. Some agents work primarily with sellers, and have little experience working as a buyer’s agent. When first meeting with Realtors, ask about their background working with buyers as well as their knowledge of the neighborhoods where you’re interested in buying a home.
“It was definitely scary putting that much money down on something, but it was very reassuring knowing that our Realtor knew the area and took it very personally,” says Emily Digmann of Carmel, Indiana. “She was always really honest with us. She did a great job of going through the pros and cons of each house with us from her perspective which is what we really wanted to hear.”
4. Have your paperwork and finances ready
When buying a house, organization is key. You’ll be required to produce a small mountain of paperwork beforehand, everything from a few recent pay stubs (yes, even if your paycheck is direct deposit) to the last few years of tax returns. Oftentimes, lenders ask for the same information multiple times, so having your paperwork at the ready will help expedite the process. It also comes in handy if you happen to find your dream house right away and need to put in an offer immediately.
Ty Williams of Seattle, says having his ducks in a row was essential to buying a newly listed townhome on just his second day of searching. “If you have everything in order and ready, it helps you a lot,” he says. “That’s why I was able to go in so quickly. I didn’t have to worry about getting all my documents together.”
5. Buyer beware
As with most things, the onus is on the buyer to make sure the product you’re purchasing isn’t defective (unless it’s a fixer upper of course, but that’s a whole other story). Start by hiring a competent home inspector and great real estate agent who is adept at identifying issues from the get-go.
As the buyer, don’t be afraid to ask questions about a house, whether they’re directed toward your real estate agent or the seller’s. Ask for proof of recent repairs or major system replacements (like the roof or HVAC). Even do a little digging on your own through county property records to find out a home’s ownership history.
Christopher Kay of Chicago says he learned his lesson after putting in an offer on a house that ended up having huge structural defects, which were thankfully pointed out by his home inspector in time to walk away from the deal.
“Make sure you have an idea of what you’re getting, cause once you buy it, you’re stuck with it,” he says.
What advice would you offer a first-time homebuyer who's house hunting? Share your thoughts with us in the comments section below.