The idea of owning your own home is a dream milestone for many people. That said, it can be frightening to step off the renter ledge and into the hefty responsibility of owning a house. Though you can paint and put as many holes in the wall as you like, you’re also on the hook for following the HOA code, paying property taxes, and any plumbing or electric problems.
The unknowns of homeownership
Homeownership comes with expenses, some of which you may not identify at first. It’s never easy to determine the hidden costs behind repairs, replacements, and maintenance. The roof might appear to be in pristine condition when you buy the place, but who knows what the future might hold? Fortunately, you don’t have to go in completely blind.
Some hidden costs of homeownership include:
- Property taxes
- Homeowners’ insurance
- Underlying or brewing pest infestations
- Cleaning and maintenance
You can put your fears to bed by setting aside some money for unforeseeable home expenses.
When it comes to keeping your home in tip-top shape, an ounce of prevention is worth a pound of cure. It’s best to deal with any problems as soon as you notice the signs. For example, if you have a piece of roof that warps or leaks in heavy rain, fix it before progressive damage occurs.
In the case of pest infestations, you should keep an eye out for signs like termite mud tubes, rat droppings, and holes in your stored linens. With these telltale signs of a potentially catastrophic termite infestation committed to memory, you can actively prevent squeaky wooden floors, hollow walls, and peeling paint—all damages that can quickly add up.
Not affording your dream home
Most first-time homeowners fear not having enough money to buy their dream home. However, it may surprise you to learn that it’s not as expensive as many people think. Most of the time, all it takes is a strict budget.
After understanding your finances, approach a reputable lender who’ll assist you in the planning. Trustworthy lenders usually ensure you’ll spend no more than a third of your income on a house payment. After all, they want you to make your house payment as much as you do, so it’s not in their best interest to give you a loan you can’t afford.
Working with your real estate agent and your lender, you can determine how much you can afford to pay monthly. Note, this conversation should happen before you start searching for a home so that once you choose one, you can be confident it fits your budget.
Lower-income Americans might qualify for an FHA loan, which has lower requirements for eligibility. Though you might have to take a pass on a mansion, the home of your dreams doesn’t have to be out of reach.
Working with a real estate agent
You’ve probably never worked with a real estate agent before, and you have no idea how to find a reputable one. Luckily, there’s no reason to get overwhelmed by a frantic search for the best agent. No doubt you’ve hired professionals before, and this process won’t be any different.
The best real estate agent is one with:
- Quality experience in the real estate market
- Knowledge of the local housing market
- A good working relationship with their clients
There are many ways to find an excellent real estate agent. You can research online, ask for referrals from friends, or visit a few offices and interview several of them. Make sure that your agent has their license and that the terms of their commission are clear to you.
While a reputable real estate agent is well worth their commission price, you don’t want surprises when closing the deal. A bit of research now can save you a lot of chaos later.
Your credit score is poor
A good credit score comes in handy when you’re trying to convince a bank to give you a home loan. Your lender is likely to provide you with better terms and interest rates the better your FICO score. A high credit score indicates to your lender that you’re low risk, and so they’re more likely to make concessions for you.
On the other hand, a low score can land you with hair-rising interest rates or even see you denied entirely.
Work with your lender to establish your credit score. A suitable lender will explain your credit score to you and what it means for your goals. In addition, trustworthy lenders will advise you on building your credit if it’s not quite there yet.
Not getting a good deal
No one likes to feel like they were suckered into overpaying for what they have.
Just remember that the real estate market is in constant flux, and what your friend paid for their home may not be what you pay for the same type of home a year later.
Your real estate agent should explain the price and overall trends in your local market. This analysis is the best way to establish whether or not the deal you’re getting is worth its salt.
Complexity of the buying process
First-time homeowners are often wary of the red tape involved. Many don’t know what to do when it comes to the lending process and feel intimidated by the sheer number of documents and signings required.
Another concern is how to make the payment and seal the deal before another buyer can swoop in with a superior offer. This hand-off is where your real estate agent comes into play.
Your agent will guide you A to Z from home searching, viewings, negotiations, and payments. In addition, agents help with signing documents and confirming the purchase. Your lender should also do their best to explain the terms of the loan and loan documents to you.
No one is born knowing how to buy a house or take care of one. Experts in the real estate field will help you snag the keys to the place of your dreams, no fear required.