July 17, 2018
While I am (what feels like) eons away from even thinking about owning my own home, I realize that many of you reading this may be a bit closer to this milestone. Since I am still living in renter's world, my knowledge of home buying is pretty slim so today I'm bringing in an expert on this matter. He also happens to be a great friend of mine!
Rusty not only knows home buying because he and his wife, Jess, bought their first home just last year, but he's also pretty well informed as a Houston based real estate agent.
Here are the top 5 things he advises you to consider before purchasing your first home:
If you have been a longtime follower of Katie’s 1) You are probably a Rockstar who makes super smart decisions and 2) you are likely well on your way to getting control of your money and being debt free! That also means you are probably in a better position to buy a home than a lot of other people (who are silly enough not to follow Katie). That said, buying a home can be super overwhelming which is how I felt when my wife (Jess) and I decided to buy our first home. However, once we got through it and I understood how the process worked, I wanted to do it again, so I became a real estate agent! Based on my own experience buying my first home, and now in the real estate business, here are 5 things to consider before buying your first home:
1. Consider Talking to a Mortgage Lender (WAY before you’re ready to move) - This should really be the one of the first conversations you have when you consider buying a home. A lender will be able to tell you what you qualify for AND will be able to help you better understand how much money you will actually need to have saved up for the kind of home you want to buy. Furthermore, they will be able to explain the various options that are available to you (first time home buyer programs, lower down payment programs, veterans programs, etc.,).
I know Dave Ramsey has some endorsed local providers that work with people who follow the Financial Peace University plan. Definitely check those out. My biggest tips here are to find someone smaller and local. You want to find a company who is going to treat you like their number one client even if you’re not ready to buy yet. They work for you and you should find someone who gives you great service and options that will fit your situation best!
2. Consider Saving MORE Than You Think You Need - If you talk to a mortgage lender on the front end, you’ll have a good idea of what kind of down payment you’ll need, but there is a mess of random things you’ll have to pay for when buying a house. For instance you’ll likely need to pay for an inspection, appraisal, origination fee on loan, title insurance, escrow fee, mortgage insurance, home owners insurance, and more. A good lender should be able to give you a rough estimate on this kind of stuff too, but keep in mind they’re just estimates.
On top of that there are other expenses that are bound to pop up – boxes and packing material, moving company, a new couch for your beautiful new living room, etc. If you are planning on making a move in the next year, I recommend starting a sinking fund today. Save that money little by little each month so that when your move comes, you can enjoy the process, rather than looking in the couch for change to pay the movers to move it!
3. Consider The End of Your Lease / When You Can Move - When you even start thinking of moving, it’s super easy to get caught up in the excitement of it all. Before you know it, you’ll be pricing shiplap and looking online at houses so you can make into your very own fixer upper. But don’t make the same mistake we did. When Jess got pregnant with our first son, we felt like we needed to get into a house ASAP (this was before we started working with Katie, clearly). We rushed, found a house we liked, and bought it… with 4 months left on our lease. Big mistake. HUGE.
Set the date that works for you and YOUR budget. Real estate agents are constantly talking about shifts in the market, trying to get people to hurry up and buy. DON’T DO IT. Set your goals, pay down that debt, and buy when it makes sense for your finances.
4. Consider Making a Priority List of Things You’re Looking for In a House - Before you make one of the largest purchases of your life and take on more debt, know why you want to move and what you need in your new house to make it worth the investment. This will help you make smart decisions when you buy your house which will, in turn, help you end up with a house that you want to keep for a long time. Making a priority list means determining the MOST important things. If you are moving because you need more space for a growing family, your priority list will keep you from buying a small house because you just LOVE the bathroom (it happens, I promise).
Things to consider when making your priority list: Size (bedrooms, bathrooms, yard, etc.), location (neighborhood, local businesses, schools, etc.), PRICE, and featured amenities. List ALL the things you want and need, separate them into non-negotiable and wish list, and then RANK them within those categories. This will save you a lot of time and energy down the road.
5. Find a Real Estate Agent That Works for YOU - A good real estate agent should be your guide, advocate, and champion. By LAW we are required to give you fiduciary duty which means putting your interests above our own, and offering loyalty, honesty, confidentiality, and more. Beyond that, real estate transactions require the involvement of a LOT of different people – lenders, inspectors, appraisal officers, title companies, contractors, etc. A good agent will have a reliable network of recommendations who should treat you as well as they themselves treat you. Find an agent that takes the time to get to know you and your needs, who treats you like their number one client, and who will do everything in their power to help you get where you need to go.
Buying a home can be overwhelming, but just like finances in general, a little planning on the front end can help you go further than you thought was possible. One of my biggest goals in real estate is to help people navigate this complicated process. You can do it! Plan ahead, get the right people in your corner, and buy that house!
PS: If you're in the Houston area and are currently in the buyer's market, definitely check out Rusty as an option to help you land the home you're dreaming of!