Buying a home is a big deal.
Too often, I think people rush into home ownership because it’s seen as a sign of adulthood and financial responsibility.
But owning a home is a big commitment, it’s not a guaranteed good investment, and it’s a truckload of work. (I’ve been a homeowner for only two years and I already have a growing list of things to do and contractors to call…it’s not always the creative paradise remodeling shows make it out to be).
And last but not least, believe me, lots of people own homes and yet their finances are a mess! Home ownership can be a smart long-term move, but you want to know what you’re getting into.
With that said, I know that if you’re reading this, you’re probably going to buy a house anyway. That’s fine; I did too. So here I’ve put together a first time home buying guide to wrap up our best advice over the last few years in once place. Enjoy!
How to buy your first home
Ask yourself: ‘Is it really time for me to buy a home?’
Don’t buy a home just because everybody’s doing it (they’re not) or because your Uncle Joe told you that it’s stupid to “throw money away” on rent (he’s wrong, too).
Don’t buy a home because it’s a buyer’s market or just because of low mortgage rates. Buy a home because you want to be a homeowner. Buy a home because you’re settling down and need a place for live for at least five years. And only buy a home if you’re financially ready.
- How to Prepare to Buy Your First Home
- How Much House Can You Afford?
- Are You Really Ready? 5 Reasons Not to Buy a Home
- Rent vs Buy Calculator
Determine how you will afford your home
For most of us, our home is the most expensive thing we’ll ever buy. And for most of us, we need one big loan to do it—a mortgage.
If you remember all the foreclosures that happened during the recession, a mortgage is not something to be taken lightly.
To pay for your first home, you’ll need good credit, a steady job, and a sizable chunk of cash for a down payment. Navigating the waters of home financing isn’t always easy, but these articles can help guide you.
Go shopping for your first home
Avoid creating a financial disaster by preparing your finances before going house hunting!
In a perfect world, you would commit to buying a home and get mortgage pre-approval before stepping foot into your first open house. Obviously, it may be you didn’t realize you wanted to own a home until you see your dream home. Either way, shopping for a home can be a long and taxing experience.
Seal the deal at closing
As if getting a mortgage and finding the perfect house wasn’t enough, you’ll soon learn that it’s only half of the home-buying process.
Here are few final tips before you head out there on your own:
- The Secrets to Winning a Bidding War
- What Happens at a Closing?
- How Much Cash Do You Really Need To Close On A Home?
Don’t forget home owners insurance
You’re not done yet! Make sure that your home is properly insured. Check out the best Home Insurance providers operating locally in your area.
Here are a couple of great options to get you started.
Young Alfred is a company that I used to lower my home owners insurance policy. Progressive was getting a little out of control with their increased rates for the same coverage, so I went to Young Alfred, answered a simple group of questions and was able to sign a new policy just a few days later.
The process was done entirely online (no phone calls to worry about) and I saved just a little bit over $600 annually on my policy. Difficult to do better than that, so they come highly recommended.
Home insurance will bring an added expense, but Lemonade keeps things affordable. You pay a monthly flat fee, with rates starting at $25 a month, and if you ever need to make a claim, they promise to pay quickly.
But one of the best things about Lemonade is Maya, the insurer’s artificial intelligence bot. Maya will walk you through the application process and issue a policy within 90 seconds. And Lemonade has a “Giveback” program – any unclaimed money left over is donated to causes you care about.
Policygenius lets you shop multiple insurers and choose the best rate. You’ll input information about the type of coverage you want and the specifications of your home, then wait for quotes.
If you need specialized insurance for events like earthquakes, floods, or a nuclear explosion, PolicyGenius can add that in. But one of the biggest advantages for first-time home buyers is that you can request to speak to an expert, who will explain your options and help you find the best coverage.
And, that’s a wrap! Our first time home buying guide. Hope it’s useful. Do let us know what you think and if there are any topics you’d like to see us cover in the future! Happy home buying!