We were clueless when we bought our first home. Renting a 2 bedroom condo for a year, life was pretty good, but when an appliance broke or we wanted to add our own personal touch we were limited. Alex is incredibly handy and it wasn’t until we moved into our first home that I realized by renting we were holding ourselves back. Our home has become a hobby and without it I don’t know what we would have done with our spare time.
Once we decided to buy our first home we were clueless to initial costs and responsibilities that would arise. If you are thinking about buying your first home see below for tips we wish someone had shared with us:
- The mortgage WILL NOT replace your rent. There will be extra monthly expenses than just your mortgage, such as taxes, home insurance, home warranty, sewer, and anything extra that comes up and stuff will come up! As strict as we are with our budget we find every year something arises.
- If you’re just starting to talk about buying a home set a budget for your family. Include 20% of the initial home price for a down payment, enough for renovations and furniture (depending on the state of the home) and try to set aside another substantial cushion for surprises.
- We cannot express the importance of having an extra cushion! If nothing happens then use the money on a fun trip!! Our cushion has been used so far on a hot water boiler and broken furnace. If setting aside extra cash after a down payment seems scary to you then insist the seller give you a home warranty. The home warranty will cover the repairs of any major appliance, it will feel like a landlord whenever you need something fixed. We had the sellers buy us Home Shield. If you get so lucky to avoid surprises be sure to send us pictures of your vacation!
- Once you decide on your dream home it could take 2-3 months till you actually move in. We found our home in October and our condo lease ended in December. We avoided paying rent and a new mortgage within the same month it was amazing!
- You will not owe your first months mortgage payment till 30 days after closing. Unlike rent which is paid the beginning of the month a mortgage is paid once it has accumulated. As a result, the first month in your new home will be mortgage free! YAYY!
- Be sure to put down 20% !! If you have your eyes on a dream home and you cannot afford 20% down payment DO NOT BUY!! Haven’t you experienced enough debt from student loans?! By avoiding 20% downpayment of the home’s purchase price mortgage lenders will give you a higher interest rate or have you purchase points to achieve a lower interest rate. In each instance you are giving away more hard earned cash towards interest. With low mortgage rates and a rising housing market putting down 20% makes you an attractive buyer. Lenders and sellers will be more willing to work with you despite your age. Everyone treated us like kids till we revealed we could put down 20% 🙂
- Don’t be afraid to ask questions! Your mortgage broker, lawyers and relator will try to use all these home buying fancy words but this is your first time buying a home you have no prior experience. If you are afraid to ask questions comment below and we will be happy to answer!!
What were some unexpected costs you found when buying your first home? Also let us know if this article was helpful! We plan to share more of our first home buying experience soon!