Congratulations! If you’ve landed here, it likely means one of two things: you’re either ready to buy your first home or you’re thinking about what it may take to prepare to buy your first home. Either way, you’re in the right place.
With a purchase as large as a home, knowing when you’re ready to take the plunge can be hard. So, how can you decide when the timing is right to buy a home? Whether you’ve landed the job of your dreams, are getting ready to welcome a new member into your family, or you’re sick of putting money into renting that doesn’t build you equity, the right time to buy a home will look different for everyone.
While purchasing your first home is exciting, it can be equally scary. That’s why, instead of diving head-first into the deep end, we’re giving you 7 tips to help you prepare for your first home purchase and get ready for your big move!
Get Your Finances in Order
Once you start thinking about the possibility of buying a home, it’s time to start thinking about your budget. Meeting a savings goal often doesn’t happen overnight, so it’s important that this step begins long before you plan to start your home search. Even then, it can be difficult to wrap your head around just how much you have to save—that’s when you call in the experts. Sitting down with a real estate agent at the very beginning of your journey can help prepare you for what’s to come financially and mentally, even if you’re well over a year out from getting started!
It’s easy to get caught up in the purchase price and forget the other costs associated with buying a home, from walk-through to closing—plus, don’t forget move-in costs and a rainy day fund!
When determining your budget for how much money you’ll need upfront to buy a home, you’ll need to consider:
- Earnest money – This is money you’ll pay to show you’re serious about buying a home. Also known as “good faith money,” this money is held in the listing company’s trust account until closing, then you’ll get it back as credit to apply to your down payment and closing costs!
- Inspections – This should include home inspections, plus pest and radon inspections. While you can’t prepare for every repair you may have to make on your home, it’s good to put a little extra aside for surprises that may come out of these inspections!
- Appraisals – Your lender will schedule an appraisal appointment with the seller’s agent to confirm the value of the home. Unlike an inspection, the appraisal may be a requirement for financing to determine the home value is in line with the agreed upon offer. If the appraisal comes in low, you may decide to spit the difference with the seller, pay the difference, or adjust the purchase price.
- Down Payment – A down payment is the money you pay upfront to get a home loan. You’ve probably heard you need 20% of the purchase price. While the more you can put down, the lower the monthly payment on your mortgage will be, you don’t actually need 20% — the “standard” is becoming more and more uncommon.
- Moving – Think bigger than just transporting your furniture and belongings, you should also be thinking about packing materials as well as any necessary cleaning supplies as you move out of your old place and into your new home!
Natasha Wendt, REALTOR®, CRS, ABR
“If you don’t have one already, be sure you’re working on establishing a rainy day fund, fun money fund, or both! At some point, something will break, whether at home or on your car and you won’t want that surprise expense to set your budget back. So start building that rainy day fund. Likewise, you should have a fun money fund! This is why when people tell me what the bank pre-approves them for I often counsel them not to buy at the tippy top of that budget. You should have some extra money to put into their rainy day budget and to be able to save up for a vacation, or some new furniture for their new pad! Maybe even that landscaping project, to create the game room you’ve been dreaming of, or whatever space drew you to your new abode.”
Find an Agent
If you have purchased a home before, you know a lot goes on behind the scenes to close the deal. The simultaneous tasks, inspections, appointments, and preparations can be difficult to manage. From the physical move-out and move-in, the thorough paperwork, and the intense emotions you feel when buying a home, having the right guidance is more important than you may think—that’s why it’s so important to find the right real estate agent for you.
When choosing a REALTOR® it’s important to look for someone you connect with on a personal level who is trustworthy, a source of support, has a wealth of information to educate you, and, of course, is an expert in their field.
Cindy Clark, REALTOR®
“Do yourself a long-term favor and use a real estate agent to represent you if you are buying a home. Being represented, protected, guided, and having peace of mind, knowing that an expert helped you at every step along the way when you bought your home is priceless. The consequences of not using a REALTOR® can be expensive, stressful, and regretful. Specializing in first-time home buyers, I’ve learned that education about the home-buying process is what people seem to love the most—you get a professional, friend, and teacher!”
Becky Halsch, REALTOR®
“It’s important you find a REALTOR® you’re comfortable with, one who will walk you through every step of the home-buying process. Each step requires careful attention to dates and deadlines as written in the purchase contract, your REALTOR® will make sure those are met; they are there to answer questions, facilitate understanding, and be your advocate. Buying a home is one of the biggest purchases in one’s life and as REALTORS®, we want to make it one of the best experiences of your life!”
Find Your Community
Your dream home is about more than just the house, it’s about finding the house in an area and community you want to be a part of. Think about what matters the most to you, maybe it’s proximity to a job, good schools, a quiet area filled with nature, walkability, or space!
Good news! No matter what your priorities are, there’s truly a place for everyone in the Iowa City-Cedar Rapids Corridor. The area prides itself on being a uniquely diverse cultural scene, with an environment that fosters connections with people similar and opposite to you!
The ICR Corridor is home to some of the state’s top school districts and esteemed employers, making it a great place to live, learn, work, play, and more!
Many of our agents were born and raised here, but we also have our fair share of Iowa transplants who fell in love with the area and decided they just couldn’t leave—and it’s easy to see why! Whether you’re looking for the hustle and bustle of a city, a booming arts culture, family-friendly activities, a quiet suburban town, rural surroundings, access to water, farmland, or anything in between, the Iowa City-Cedar Rapids Corridor has a community to fit your wants and needs. The Urban Acres team is happy to help you find your community!
Get Pre-Approved
If you’re serious about searching for a home, getting pre-approved for a home loan is the first step you should take so you can put in an offer as soon as the right house comes along. A pre-approval letter means that a lender has looked at your finances and determined how much money you can borrow as well as an interest rate and shows your true interest to potential sellers. In fact, most sellers won’t take an offer seriously without a pre-approval. Essentially, getting a pre-approval letter is as serious as you can get without actually applying for a loan.
One thing to keep in mind is that your approval amount, loan program, and interest rate aren’t finalized on your pre-approval letter; they are subject to change as the lender gets more information as well as the time spent before you officially apply for the loan.
While you don’t necessarily have to wait to get pre-approval until you have a REALTOR®, they may have recommendations as to which lender you can use.
Becky Halsch, REALTOR®
“As a first-time home buyer, getting your finances in order is the first step. With that preparation completed, you are well-positioned to meet with a lender(s) to understand your buying power and get pre-approved.“
Set Boundaries
It’s important to bring in the experts, but it’s also crucial to filter the input you take to heart. Of course, your family and friends will want to help however they can, but be careful. You know the saying—too many cooks in the kitchen. Receiving feedback tips from those who have been in your position is helpful, but too much external noise can cause you to lose track of your original wants, needs, and goals!
Karen Mitchell, REALTOR®
“Determine early on in your process whose guidance and opinions you’d like in your decision-making process. Is it a parent, an older sibling, grandma, and grandpa, or would you like to approach this one on your own? Whatever choice you make, establish and communicate those boundaries early. Working with a trusted REALTOR® can help you quiet outside noise you may not want or embrace and engage those that you do.”
Trust Your Instincts
Outside of paying attention to the obvious factors in front of you, when you’re looking for a home or buying a home, you also have to pay attention to the intangibles.
Think about the last big-ticket item you purchased or big decision you made. You weighed the facts, assigning them as ‘pros’ or ‘cons,’ but likely those positives and negatives weren’t the only considerations you made. The determining factor is often whether or not you have a good feeling about something. If you’re unsure about a decision, speak up!
Maria McCaw, REALTOR®, Broker Associate
“My best advice for first-time homebuyers is that it’s OK to feel like you’re jumping off a cliff. Recognize that this huge jump/investment shouldn’t feel easy. And always trust your instinct. And always trust your instinct. “
Ask Questions
Your REALTOR® will walk alongside you during the entire process, from tours to closing and everything in between, but that doesn’t mean you’re off the hook! Some of the top feedback we get is that our clients love learning more about the steps and intricacies throughout the home-buying process because it gives them the confidence and understanding they need to remain calm in what could be a stressful time. To get that deep understanding, it’s important to ask questions!
Ben and Whitney Russell, REALTORS®
“Our first piece of advice for first-time homebuyers is to be patient! With low inventory, it may take some time for the right home to come along. Also, don’t hesitate to ask questions. Be educated and don’t be afraid to speak up!”
Finally, the most important thing to remember when buying your first home is to have fun and soak it all in. You’re buying your first home and are gearing up for your next adventure, that’s an exciting feat!
If you’re preparing to buy a home in the Iowa City-Cedar Rapids Corridor, let us help! One of our 50+ agents will help you get into your perfect first home in no time.
