Tips for first time home buyers

Tips for first time home buyers.

The first time you buy a house is a great mixture of excitement and fear. Excitement because you are buying a new home, a future for yourself and / or your family. Fear of the unknown, of what could happen if things go wrong. Both these feelings are normal and even desirable when making serious financial decisions. A happy go lucky, careless attitude might sometimes be successful with daring entrepreneurs but for most of us making carefully thought out decisions taking into account all the factors is the way to go.

So we have stroked and massaged our egos we have told ourselves it is normal to be excited, to be scared, even a little overwhelmed. But that doesn’t really help us does it. We want to know how to go about making good financial decisions when buying our first home. You already know you won’t get all the answers you need from this article, but you can get some tips about where to start.

1) Make sure it is a good buy. You’ve heard it before but it is true, you house is probably going to be your biggest investment. Make it a good one. To do that there are a few things you don’t want to do. For instance do not buy at top of a cycle. What does that mean? Did you notice how the prices of homes didn’t stop rising and rising until they nose dived Autumn 2008. Summer 2008 was the top of the cycle. It is not easy to tell when a cycle will happen but they do, and regularly. In the end of 1800’s, 1890’s, America went to what was then it’s biggest depression. We’ve topped that particular one many times over, both in the 1930’s and now.

I made the same mistake when buying my second home, buying at the top of a cycle can leave you in negative equity, which means you owe more on your house than it is worth. Signs a cycle is nose diving are hard to see, or else everyone would be forewarned. But when you see people overconfident, with the feeling that an industry, Real Estate for example, can do nothing but grow, worry. If people are borrowing more than they can afford and think they are economical geniuses for doing so, worry.

2) Use professionals. When it is your first buy it pays to pay a little more and make sure it is all kosher.

3) Do not overspend. You will have plenty of time to climb the house ladder. Your first house does not have to be perfect. It is a good idea to get a house that needs a little work and you can easily increase its value. That will increase your equity and maybe allow you to improve your loan conditions.

4) Choose your interest rate wisely. If you are buying to sell in a few years you might do well getting a variable interest rate. But circumstances and budget vary, be smart do your research and work out the right option for you.