Candice Peng 9/24/2020
Becoming a homeowner is a big commitment. Too often, people rush into home ownership because it’s seen as a sign of adulthood and being financially responsible. With the current interest rate environment, a lot of people are considering purchasing their first or second home. For those first-time home buyers with no prior experience, here’s a few things you need to know before diving into house hunting with confidence—and with as few curveballs as possible.
1. How much home you can afford as a first-time home buyer
Before your search, you need to find out how much money your lender will let you borrow. In general, experts recommend that your house payment (which will include your mortgage, maintenance, taxes) should not exceed 28% of your gross monthly income. So, for example, if your monthly (before-tax) income is $8,000, multiply that by 0.28 and you'll see that you shouldn't pay more than $2,240 a month on your home mortgage.
A search of “mortgage payment” or any related terms online will likely lead you to an online mortgage calculator. While it is easy to use, remember that online mortgage calculators often provide you with estimated amounts. For more accurate information, it is best to consult with a lender for mortgage pre-approval. Typically, the bank will assess your credit history, credit score, and other factors to determine whether you qualify for a loan (and how much you qualify for). Mortgage pre-approval also puts home sellers at ease, since they know you have the cash for a loan to back up your offer.
2. Do your homework
Buying a house could be a lengthy and often a complicated process. Once you find your ideal home and make an offer that’s accepted, you may be eager to move in right away—don’t be hasty! It is smart to do your due diligence before making any purchase decisions. Here’s a great article explaining the real estate due diligence process: https://www.realtor.com/advice/buy/what-is-due-diligence/
It is always a good decision to add some contingencies to your contract in case something goes wrong and you need to back out of the deal. Hiring a professional home inspector to check out the house before you buy it, for example, is the most common contract contingency. It may take you some more time, but it can save you big money in the end.
3. Make the most of open houses
Online 3D home tours have become more popular amid the COVID-19 pandemic. These tours let shoppers virtually walk through a home at any hour and observe details. A great example is New Empire’s 567 Ocean Avenue in Prospect Park South, Brooklyn. Potential buyers can easily take a tour around the model unit via 3D tour here (https://www.zillow.com/view-3d-home/f8dcf6fd-165a-4700-a0b5-46034b2e7f8a?setAttribution=mls).
Companies and products such as Matterport, VPiX and Zillow 3D Home allow users to electronically stitch together photographs, allowing prospective buyers to look around as they virtually walk through the home. In a 3D tour, you can look up and down, observe details from different angles, almost like if you’re physically there. 3D tours enable prospective buyers to closely examine things that may be not so visible in regular photographs.
The material selected for the backslash and countertop, the space between the kitchen island and the fridge… It’s these little details you would want to pay attention to when walking through the home, now available through 3D tours.
4. Buy adequate home insurance
Your lender will require you to buy homeowners insurance before closing the deal. Home insurance covers the cost to repair or replace your home and belongings if they're damaged by an incident covered in the policy. It also provides liability insurance if you're held responsible for an injury or accident.
We suggest you check out the best home insurance providers operating locally in your area. To get started, here are a couple of great option:
-Young Alfred: https://youngalfred.com/
5. Pay Attention to Outdoor Space
New York City has a reputation for being one of the most expensive cities in the world – and it’s not a surprise that apartments with a large outdoor space are usually hard to find. Since the pandemic, more people are opting to work from home and are spending most of their time indoor. A health living environment with some outdoor space for fresh air becomes an important aspect of our life, more than ever before. For family with kids, a private roof would be a dream come true. For living, working or entertaining, a private roof does it all for you
– enjoying quality family time, practicing yoga and meditation, inviting friends over for a summer rooftop party, you name it.
A large terrace is a dream of most people living in city apartments. Starting the day with a steaming cup of freshly brewed coffee, enjoying the beauty of a sunset with loved ones…a large terrace is all you need for magic to happen.
Marquand, B. (2020, August 14). 14 Tips for First-Time Home Buyers. Retrieved September 22, 2020, from https://www.nerdwallet.com/article/mortgages/tips-for-first-time-home-buyers
Weliver, D. (2020, May 29). First-Time Home Buying Guide: Everything You Need To Know. Retrieved September 22, 2020, from https://www.moneyunder30.com/first-time-home-buying-guide
Wiebe, J. (2019, February 13). 5 Things Every First-Time Home Buyer Needs to Know. Retrieved September 22, 2020, from https://www.realtor.com/advice/buy/what-every-first-time-home-buyer-needs-to-know/