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4 Things Smart First-Time Home Buyers Do

4 Things Smart First-Time Home Buyers Do

Thinking about buying your first home? That’s exciting!

The thing that surprises most first-time buyers is the sheer number of things that need to happen in order to find, fund, and finally move into a new home. There’s a lot that goes into the process. Sure, you’ll be working with a mortgage loan officer and real estate agent, and it’s their job to be an all-around Sherpa, guiding you along the way. They’ll help you navigate all the steps.

However, there are four key items first-time home buyers should know in advance. The following four tips deserve the most attention and will help make sure you have a great home-buying experience.

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1. Get pre-approved.

Without financing, real estate transactions simply don’t happen. Loans make the housing world go ‘round. Getting a loan pre-approval squared away before home shopping is important, as you will see below.

First, pre-approvals involve formal documentation of your credit score, credit history, income, employment, etc. Pre-approvals carry much more weight than pre-qualifications. Pre-qualifications don’t involve any formal documentation, which is why they are essentially meaningless to everyone from real estate agents to sellers.

Pre-qualifications will give you confidence. You’ll know what loan program you want to use such as FHA or VA loans (these very common first-time home buyer programs). There’s a big difference since FHA loans require 3.5 percent down and VA loans are zero down loans. Knowing know your loan program and how much money you’ll need to get the deal done means no surprises later on.

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Pre-qualifications save you time because you will know the mortgage amount for which you qualify. You will shop faster and smarter by searching for homes you can afford. You’ll get better service from real estate agents. In fact, many agents insist that their clients are pre-approved. Everyone involved in this transaction deserves to know that their efforts are leading toward a tangible outcome.

Continuing with that thought, sellers may not let home shoppers view their home without a pre-approval. Furthermore, when you make an offer on a home, sellers will take a pre-approved buyer seriously.

2. Search with focus.

There’s never been a better time — in terms of efficiency — to shop for a home. Online searches, using tools like Zillow or Redfin, are fast and easy. And you can stay focused on properties you are likelier to acquire when you know your pre-approved loan amount.

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After searching for a while, you’ll want to narrow your choices and pick homes to view in person. This the time to leverage you real estate agent’s understanding of the surrounding area. Their input on schools and neighborhoods is invaluable. Modern technology, combined with your agent’s knowledge of the area, will help you determine the short list of homes to visit.

3. Keep your emotions in check.

Stuff happens. Real estate deals can go sideways for a number of reasons, including:

  • Offers rejected by sellers
  • Negotiations wind up going nowhere
  • Appraisals come in too low
  • Lenders need additional documentation
  • Home inspections reveal major issues with the property

A lot of these things are outside of a buyer’s control. This is why keeping emotions in check is important. Going back to the search phase above, having several homes on your short list can prevent buyers from fixating on just one property. Having choices helps reduce the potential for an emotional roller coaster.

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4. Don’t skip the home inspection.

Getting a home inspection before finalizing a deal is important. Surely you’d prefer not to have buyer’s remorse. Don’t skip this step, even if you’re planning on buying and rehabbing a fixer-upper home.

While all purchase transactions will require a property appraisal, some mortgage programs do not require an inspection. An appraisal will tell you and your lender what the home is worth, but an inspection will tell you if it needs any repairs.

There’s pretty good chance an inspector will find some imperfections in the home you want to buy. The good news here is that inspections:

  • Identify issues with the property
  • Come from a neutral third-party
  • Help create space for you and your Realtor to negotiate with the seller

Asking a seller to fix something before you buy it or come down on the price is pretty typical after an inspection. More importantly, you’ll know what you are buying so the chance of any surprises is very small. The idea here is to prevent you from encountering unforeseen expenses after moving in.

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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