Buying a home in Phoenix for the first time can be a daunting experience. If this is your first time in the market, remember that knowledge is power.
Below, we provide 5 key lessons to remember as you start shopping for your first house.
1. Get pre-approved for a loan before shopping around.
It may be tempting to start looking for and touring homes before actually speaking with a lender about a mortgage. But if you do end up finding a house that you truly can’t live without, it will be an added challenge if you have to be been approved for the loan after the fact. Markets can be fierce, and you don't want the sale to go to someone else before you have time to speak to lenders.
To better set yourself up for success, speak with lenders first, and set your maximum budget according to the loan amount you can get pre-approved for. At the same time, keep in mind that you shouldn’t max out your pre-approved maximum either. That’s the next tip …
2. Don’t forget about the hidden costs of your new home.
Whenever you start shopping around for a new home, you should have a maximum budget set. This overall amount should match up with the amount you are pre-approved for, but it will also need to match up with your monthly earnings so that you can keep up with bills. As a good rule of thumb, try not to spend more than 25-30% of your monthly take-home salary on housing.
While you may have rented a home or apartment for a substantial monthly rent payment in the past, paying for housing costs when you own the home will be much different. You’ll be liable for your mortgage payment, but on top of that, you’ll be paying for water, electric, heating, garbage and recycling, and Internet.
You’ll also be paying for maintenance and upkeep, which can unfortunately bring with it a number of unexpected expenses. Broken stair step? That’s your responsibility. Furnace down? All repair costs are up to you. Leaky faucet? That’s you too.
Instead of instantly going with the newest and nicest home your pre-approved loan will cover, factor these hidden costs into what you should expect to pay each month, and make the reasonable choice.
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3. Decide on your non-negotiable features from the beginning.
It’s best to know exactly what you’re looking for in your home from the very beginning. If you have a large family, one bathroom probably won’t cut it alone. If you love to cook, a tiny kitchen isn’t for you.
Of course, at the same time, you’ll need to be reasonable with your expectations — and take chances. Let your real estate agent know exactly what you’re looking for, but don’t be afraid to look at homes that don’t seem to fit the bill right away. You may be pleasantly surprised.
4. Don’t sacrifice location for amenities.
As they say, location is everything. And it’s true! While you may love the extra half-bath on the first floor, the super-size garage, and the garbage disposal in the kitchen, these extra amenities are actually less valuable than a great location for your home.
Let’s say you have children. Not only will you want to find a location that’s safe and low in crime, but you’ll also want to be in a good school district within the Northern Phoenix area. You’ll also want to be within close proximity to your place of employment, grocery stores, and safe and friendly neighbors. These are things your real estate agent should be able to help you with, so make sure to stipulate your location requirements from the get-go.
5. Understand your closing costs.
Paying for the home itself will certainly be your biggest expense, but don’t make the mistake of forgetting about closing costs. You’ll most likely need to pay for an appraiser and take care of the costs for the real-estate attorney. On average, closing costs will be about 2-5% of your home's purchase price. Finally, don’t forget about your own moving costs, which can quickly add up.
Buying a home as a first-time home buyer can be a lengthy and challenging process. Your first experience may not be as smooth as you’d like it to be but being prepared and taking these important pieces of advice into consideration will help immensely.
This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only.
Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.