You keep hearing it from friends, family and co-workers — “You really should buy a place.” Truth is, you’d love to own a home, but figuring out how to get started is just one of the stumbling blocks you are putting in front of yourself and those elusive keys. You may also be afraid you can’t afford a house, or can’t afford one you like, and then there is the down payment. You may worry that you don’t have enough saved.
It’s understandable — making a major life change, making a major purchase, should be approached with some thoughtfulness. But don’t let your fears get in the way. With a little education and preparation, making the leap from renter to homeowner can be done with confidence.
Let’s address solutions to some of the top concerns I’ve heard from first-time homebuyers.
No. 1 “I can’t afford a home”
Some would-be buyers are consumed with the thought that they can’t afford a home, that they will be “house poor” and have to forgo vacations, shopping and evenings out with friends.
The first thing to do is to create a budget. How much are your living expenses now? How much rent do you pay and how much more, if any, do you want to spend on a monthly mortgage payment? What other expenses do you have or will you have with a new home? Utilities? A condo/coop fee? Make a budget of everything. With that budget in hand, start your discussions with a qualified lender. Using your monthly payment as a guide and layering on your income and credit history, your lender can help you determine the proper price range in which to search.
There are a lot of loan programs that can assist first-time buyers with down payment assistance. Talk with you lender about the specifics and if you do, or could, qualify by taking a class.
If you are in the military there are VA loans to consider. Those loans don’t require a down payment. Compare a VA loan to a conventional loan to ensure you are finding the right program for your financial situation.
Once your price range is determined, work with your lender to get pre-approved. Being pre-approved is a necessity in the D.C. market.
No. 2: ”I will not be able to purchase a home I love”
You’ve made a budget, now make a list. What features are important to you in your home? Location? Closets? Outdoor space? Parking? Living in a pet-friendly building? The answer is different for everyone so make a list. Then further divide that list into two columns: one for needs and one for wants. Put each item from your initial list into the proper column, in order of importance. Be realistic and rational. Share the list with your real estate professional so they can help you stay on track with what is important as your tour.
No. 3: “I’ll buy a house that needs unforeseen repairs”
First, accept that no home is perfect. It doesn’t matter if you spend in the hundred thousands or millions, every home eventually needs maintenance and upgrades. Repairs and homeownership simply go hand in hand. The good news is when you own the home you get to decide what to do, when to do it and how to handle it. You are no longer at the mercy of a landlord who may not see the broken HVAC as the urgent need that you do.
The key is to be prepared for repairs. Keep a home repair emergency fund for that unexpected leaky faucet or new refrigerator when your current one dies. And most importantly, before you purchase a home, have it inspected. An inspector can help you identify all systems and their possible age and life expectancy. They can look for signs of water damage or an electrical panel in need of replacement. Many will even advise you on potential repair costs. With the inspector’s report in hand, you and your agent can talk through to identify which issues are important to negotiate with the seller.
No. 4: “I’m afraid I’ll overspend”
This one is really simple and uses some common sense — shop within your budget. It sounds simple, but too many buyers start looking outside of their identified range. Just don’t do it. There are great homes in all price ranges. Staying within the budget you have identified will make your search, offer and escrow period a lot less stressful.
Perhaps you have other concerns or questions? Know that every question is important, every concern valid. The important thing is to raise them all with your team — lender, agent, inspector and ultimately the title company. A good agent will bring all of these resources to your search so you can feel confident in your purchase.
Editor's Note: As published in The Washington Blade, September 21, 2018.