Buying Your First Home

Buying Your First Home

Let’s say you want to buy a home but don’t know where to start. How should you begin? The first thing to do is to determine your price range, which means knowing what mortgage amount you qualify for and the amount available to you for a down payment and closing costs.

Determine Your Price Range

Start by contacting a lender (e.g., bank or mortgage company) and ask to be pre-qualified for a loan. Lenders will consider your income, debt, and credit score to establish your maximum loan amount. This is typically the most important information you need when considering your price range.

The second piece of information you need is the total amount of cash you’ll have for your down payment and closing costs. The size of your down payment is key to determining your price range. Two buyers who qualify for the same loan amount but have different down payments will probably fall into different price ranges. Don’t forget about closing costs, which are generally high in our area. You can find an in-depth explanation of closing costs in my article, Demystifying Buyer Closing Costs.

When looking at listings online, don’t skip over information about real estate taxes. Make sure you know how much the taxes are and how they’ll affect your monthly payment. For most purchases, one month of real estate taxes is included with the principal and interest in the monthly mortgage payment. The higher the real estate taxes, the higher the monthly mortgage payment. If you put at least 20% down, you may be able to pay the taxes separate from your mortgage, but you’ll still need to pay the total tax amount every year.

Be Realistic About What Your Money Will Buy

When starting your search, keep in mind that not all features are as readily available in all price ranges and areas. For example, given the same price range, it can be much harder to find new construction or a large lot in one area than in another. Be realistic about the features you can expect to find in your target area, and consider whether you’re willing to explore other areas if you can’t find what you’re looking for.

Must-Haves Versus Nice-to-Haves

When deciding what features to look for in a home, separate them into must-have and nice-to-have categories, depending on your family and lifestyle. Thinking this through in advance will help you choose the home that best suits your needs. Try not to be wowed by a well-staged home that looks great but lacks one or more of your must-have features. Cosmetics can be changed relatively easily, but changing room sizes or the number of bedrooms or bathrooms can involve major construction projects and high costs.

Factor in Ongoing Costs

In addition to the mortgage, the cost of owning a home entails utility costs and ongoing maintenance. Heating costs in particular can vary widely, depending on the type of heat and the age and construction of the home. For homes lacking adequate insulation, heating costs can be high. Ask for a monthly estimate of the seller’s utility costs, including heat, before making an offer, and factor those costs into your budget.

If you’ve never owned a home, it’s easy to underestimate ongoing maintenance costs. Typical maintenance costs include routine HVAC maintenance, plumbing and electrical repairs, appliance repair or replacement, gutter cleaning, chimney cleaning, driveway sealing, and lawn care. When considering what mortgage amount is right for you, make sure you’ll have enough left over to cover maintenance costs, which are sure to arise.

Read more of Annette’s real estate articles for the latest real estate advice.

If you’re planning to buy or sell a home, contact Annette Nelson at (610) 247-7892 or

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