Topics:Homeowner Tips Downpayment Home Improvement First-Time Homebuying Working With An Agent Successful Selling House Hacking Best Mortgage Rates Companies real estate investing Closing Costs Home Loan Research
If your walls could talk, they would definitely have interesting stories to tell. But could they also tell you what projects you've been neglecting around the house? Sure, you can just live with the things you hate about your home until it comes time to sell. Or, you can fix it up this year and actually enjoy the improvements yourself! We've teamed up with Utah realtor Laurie Stauffer (@MsLKS) to identify the top New Years Resolutions your house wants you to make this year as well as a panel of productivity experts to share their best motivational tips for making changes happen. Goals your house wants you to set Make an extra mortgage payment Weight loss is one of the top goals for Americans in 2020 and weight loss can be a great paradigm in which to view your mortgage. “To take some of the weight off of homeownership, make one extra mortgage payment this year — and every year,” Stauffer advises. Consider this: If you can pay half of your mortgage payment every two weeks, rather than paying monthly, that results in 26 half-payments — which equals 13 full monthly payments each year. That extra payment can knock eight years off a 30-year mortgage, depending on the loan's interest rate, saving you tens of thousands of dollars over the life of the mortgage. Stauffer explains that it may not sound like a lot up front, but any direct principal payment is basically putting equity directly into your pocket. It’s a big return on a small investment. To switch to biweekly mortgage payments, first make sure your loan doesn’t have a penalty for prepaying your mortgage. If it doesn’t, switching your payment schedule may be as simple as asking your lender or loan servicer to alter your current payment plan accordingly. If there’s not a biweekly payment option, you can make an extra mortgage payment each year by dividing your monthly mortgage payment by 12 and adding that additional amount to each of your monthly payments to amount to an additional full payment by the end of the year. Or, you can make one lump sum mortgage payment, perhaps with a tax return or bonus. Check easy-to-do tasks off your list Stauffer recommends prioritizing simple, safety-enhancing maintenance tasks such as replacing smoke detector batteries and purchasing separate C02 detectors. “So many smoke detectors and carbon monoxide detectors are conveniently combined into one device,” Stauffer explains, “but the problem is, smoke rises, and C02 falls.” For optimal safety, place your C02 detectors no higher than bed level. Here are a few other simple tasks you can complete in less than an hour: Change air filters Install weatherstripping on doors and windows Apply WD-40 to squeaky hinges Update cabinet and drawer hardware Paint or update outlet and switch plate covers Shampoo carpet in one or more rooms Wipe down cabinets and appliances Vacuum and wash baseboards Service your HVAC system Heating, ventilation, and air conditioning (HVAC) is one of the most expensive home systems to replace, so it’s imperative to have it checked and serviced regularly. Stauffer advises ensuring it’s working at full efficiency to get the best performance and to get the most out of it for years to come. In addition to changing filters monthly, make sure your air conditioner compressor is sitting level to avoid wear and tear. Schedule a time to have a professional clean, service, and test your system annually. This will run you anywhere from $59–$150, depending on your area, a small price to pay versus replacing components or even your whole system. Plus, your annual check-up may even be free with a certain provider, depending on the purchase agreement of the homeowner who bought the system. Make simple DIY upgrades to rooms In the kitchen, consider organizing your pantry, which may include installing a new shelving system. This will minimize clutter, making space for the foods you actually want to eat and cook with. You might also update light fixtures and install a backsplash. In the bathroom, you can frame your bathroom mirror and update the lighting. In a bedroom, consider accenting one wall with fresh paint or wallpaper. Do a closet renovation by installing new lighting, double rods, and new shelving. Turn your hallway into a mudroom or add storage to your entryway by utilizing hooks, installed shelves, or a furniture organization system. Give your home exterior and yard some attention Curb appeal is king when you’re selling a home. But why should you wait until you need to sell to spruce it up? There are several things you can do this year to improve the aesthetics, function, and longevity of your home exterior and yard. First, check the direction of your downspouts and water drainage. Rain gutters and downspouts do a fine job in their own respect, but often we don't consider the water once it's off the roof. “It is best to divert the water away from the house with gutter extensions, pushing it out to five feet away from the foundation,” Stauffer advises. “There is no greater enemy to a house than water.” While you’re taking inventory of your gutter situation, take a close look at your roof and make a habit of checking it periodically, especially after a big windstorm. In the spring or during mild weather, go up on your roof and do a walk around inspection. Look specifically for curling or missing shingles, soft spots, or any flashing that may have pulled away. These are very minor things that should be taken care of immediately, so they do not turn into the monster that roof replacement can be. Stauffer explains that she sees most roof replacements starting around $8,000 but has seen them cost homeowners up to $20,000. Properly maintained, an asphalt shingle roof should last you around 30 years and a metal roof can go much longer than that when installed correctly. Here are a few other outdoor projects you may want to tackle this year: Paint your front door a color that you love Power wash your walkway Build a raised garden or flower bed Add or update outdoor lighting Wash window exteriors Plant sod Service your automatic garage door Build a shed or shop (in accordance with property lines and local building codes) How to get and stay motivated to complete your projects 1. Batch small projects Focusing on non-urgent tasks such as simple home improvement projects should not be part of your daily planning cycle. Instead, schedule a day to handle these all at once. As my executive coach Stever Robbins once told me, these projects, while often low priority in the grand scheme of things, create psychological drag. Being reminded of these unfinished projects and tasks, whether that's seeing the burned-out bulb when you head down to the basement or the unmended pair of pants in your laundry room, pull you out of your flow and introduce little bits of stress in your day that build up over time. Scheduling a day to take care of all these often smaller projects helps remove the psychological drag and makes you more effective overall, even if the individual tasks and projects don't have a huge impact. ― Trevor Lohrbeer, founder of time management app Day Optimizer 2. “Eat the frog” This is a paraphrase of a quote attributed to Mark Twain, ‘If you eat a live frog every morning, nothing worse will happen to you the rest of the day,’ which was then made famous by Brian Tracy’s book Eat That Frog. The tip is to do the hardest thing right away. It makes the rest of the day go more smoothly and eliminates all of the wasted anxiety and stress we create when we procrastinate and worry about all that we have to do. . . even when we’re not doing it. ― Sharon Danzger, productivity consultant and founder of Control Chaos 3. Reward yourself When there is a project you have been avoiding, create an incentive for doing it using an ‘if/then’ statement. For example: If I vacuum the house, then I get to watch a show on Netflix ― Danzger 4. Start small We often put off things that seem difficult, big, or overwhelming. The hardest part is getting started. So, rather than tackling the entire project, start with something small and manageable. For example, instead of committing to organizing your entire house, decide to start by cleaning out one drawer. ― Danzger 5. Set a timer When I have items to finish around the house that I don't really want to do, or the project is dragging on longer than I thought, I create one-hour periods where I work fast and furious on it, then I come back a different day and do another hour. Quickly, that project gets done by breaking it into smaller pieces. ― Camille Finan, licensed contractor and host of Remodel Your Life podcast 6. Display a picture If I'm remodeling something in my own house but not sure how to start or get find motivation, I will rip out a magazine page and tape it to the wall or area that needs to be fixed. Seeing the finished version often will propel me to find the motivation and do the work ― Finan 7. Banish perfectionism If you’ve been putting off renovating your kitchen or writing that book because you’re worried that you’re unprepared to do it exactly right, try to let go of that fear. Wanting to do a task perfectly can hold you back from accomplishing the task at all. ―Mitch Chailland, president of Canal HR 8. Visualize the future Visualize how you will feel when the task is complete. Some tasks are simply not enjoyable. But imagine how you’ll feel once you’ve finished the task. Visualize the specific positive benefits that this finished task will provide in the long-term. This tactic can increase your positive feelings towards even the dullest or longest of tasks. ― Chailland 9. Write it down In our experience and research, most people procrastinate doing their home projects because they keep that list in their head. You walk by that bathroom that needs a remodel or the appliances that need fixing and you say to yourself “I really need to tackle that project.” But two minutes later your brain is off to more immediate issues around work, family, travel, etc. and those projects get quickly forgotten. The practice of writing those projects down in either a list or a digital organizing app helps many people stay motivated to do those projects, especially if once you document the project, you get reminders to yourself that you really need to tackle it. We have observed this behavior with our users who use HomeZada’s projects and tasks features to document everything they want to do in their home. ―John Bodrozic, cofounder of digital home management system HomeZada 10. Hire out If you find that you can’t harness the motivation to do a project yourself, it may be time to make a call and hire out the task to someone else. Licensed general contractor Shannon Battle of All American Construction & Restoration suggests DIYers first outline the project phases and create a schedule for completion — then don’t take on another project until finishing the one they’ve already started. But her top tip for homeowners lacking motivation? “Stop watching YouTube and seek professional help, paying skilled people to do it the right way.” However you approach house projects, don’t neglect your home as you set your resolutions for the coming year. Your home will thank you and you will thank yourself for the renewed pride of ownership.
There's no dancing around it: tech is disrupting the real estate industry. In general, it's a no-brainer to work with an agent on the buyer's side where you're not paying a commission. But if you're a seller, you have other options, and it can be a difficult choice. Using AI and online database, startups like Open Listings, Opendoor, and Homie present alternatives to the traditional options of selling your home by paying an agent a set commission or going through the For Sale by Owner (FSBO) process without support. According to low-commission real estate network Clever, millennials are 93 percent less likely to use a real estate agent than other groups. So are real estate agents on their way to becoming obsolete? Our panel of agents and other real estate professionals say “no way” — that just because you can sell your house without an agent — doesn’t mean you should. Here are 10 advantages to working with a real estate agent: 1. Micromarket expertise Neeta (aka Sujata Durai), Managing Partner and Property Consultant at Chennai Dream Homes® "Brokerage agencies or online startups that promise to help you buy or sell a home may be strong on a national level, but not in the micromarkets in which you may be interested. A realtor is well-versed with niche areas and can reduce the time it takes to nail down a selling price and identify a high-quality offer. As a market expert, a realtor can give advice on home rates, local economy, business establishments, infrastructure, and local government laws that the web portals just cannot get into." James McGrath, Co-founder of NYC real estate brokerage Yoreevo"iBuyers like Opendoor and Zillow are aggressively expanding and becoming more of an option for sellers. In markets with fairly uniform housing stock like Phoenix, Las Vegas, and Houston, selling to an iBuyer probably makes sense. Those are the types of markets where home prices are more predictable, so iBuyers are more aggressive on price (as there is less risk in their pricing algorithms) and there are more iBuyers so a seller can see which will make the highest offer. In other markets where pricing is more complicated and subjective, you probably want to work with a realtor who can add that expertise. It might just be their opinion but the eventual buyer will be offering a price based on their opinion too." 2. Time efficiency Laurie Rose, John R. Wood Properties YourNaplesParadise.com "Choosing a local agent over an internet driven agent gets you someone who will sit down with you face-to-face and discuss your needs and take you through the buying or selling process. You are a treasured client, not a number. People feel they can sell their home on their own and make more money. Unfortunately, they don't consider certain variables. A FSBO, on average, takes longer to sell. And the longer the home is on the market, the more carrying cost is created. They will need to hire a professional photographer, possibly a stager, and they may have to take time off to show their house. In the long run, time is money; you will actually save money by hiring a professional to sell your home." 3. Litigation protection David Roberson, Silicon Valley Property Management Group"As a practicing real estate attorney I saw dozens of cases where one or both sides attempted to represent themselves in the transaction only to be completely inept in protecting themselves, or completely misrepresenting the condition of the property. In each of these situations the transactions were embroiled in litigation. Lay people do not understand the importance of investigation and disclosure of all material facts that affect desirability. A seasoned agent or broker helps ferret out all of the issues that are critical to having a successful transaction where each side was fully informed and the escrow closes without hitches. Moreover, if there is a problem during escrow, a seasoned agent or broker can help navigate those problems, whereas a lay person with little or no experience could run into trouble not knowing where to turn." 4. Referrals Than Merrill, CEO of real estate education company FortuneBuilders"Sellers will find real estate agents particularly helpful, as they often have connections that can attract interested homebuyers. Many home sales are actually the result of referrals, making experienced agents an invaluable asset to the home selling process." 5. Professional networks Jennifer Winton, RE/MAX Moves REALTOR® of Greenville, SC"My vast network of contractors, photographers, home cleaners, and home services professionals means that my clients will have professionals taking care of them every step of the way. No need to worry about timelines, inspections, or what's next." 6. Buyer vetting Melissa Okabe, Real Estate Agent, Alta Properties"Do you know what to look for in an offer? Hint: It's not just about the price offered on your home. Your realtor can discern a qualified offer or buyer from an unqualified one by carefully reviewing all aspects of the Residential Purchase Agreement and Buyer's Financial Package (proof of funds, FICO, pre-approval letter) with you, highlighting any contingencies (ex: contingent on buyer's sale of current property), type of loan and what that means for you as the seller, talking to the buyer's lender for further explanation as needed, and assisting you with disclosures such as the TDS, SPQ, etc. which are expected to be provided to the buyer at time of escrow." Daniele Kurzweil, the Friedman Team at Compass"As a Licensed Real Estate Salesperson working in New York City, I am working in a unique area where much of our inventory is made up of Cooperatives, meaning there is approval required for every purchase. Each building is looking for a unique formula from their buyers. Someone who is not familiar with the nuances of each building might bring forward an unqualified purchaser who will simply be rejected from purchasing in the building and the seller and buyer will have wasted time and money." 7. Stress elimination Neeta (aka Sujata Durai), Managing Partner and Property Consultant at Chennai Dream Homes® "A real estate agent's main job is to represent his or her client's best interests in a property transaction. If you are especially a busy executive who would rather delegate the tasks of shortlisting homes based on your criteria, managing visits, making and receiving offers from the other party, fielding numerous phone calls, emails, and meetings for coordination, you would be better off working with a Realtor, who does these exact tasks day in day out for a fee. Many highly rated agents adhere to a professional code of conduct, and manage the process seamlessly from start to finish, so that you only need to be there for important milestones like selecting the house to buy, making the final offer after negotiations, and signing the paperwork." Melissa Okabe, Real Estate Agent, Alta Properties"How do you like spending your free time and weekends? Most likely your hobbies don't include driving around putting up open house signs, coordinating catering services, comparing staging prices, hosting 4–5 hour open houses on Saturday and Sunday and Broker's Opens during the week, or meeting potential buyers at any given time during the day to accommodate a showing. It's a lot of work and may cause you, the seller, unneeded stress." 8. Access to MLS listings Daniela Andreevska, Marketing Director at Mashvisor"Only agents and brokers have access to the MLS, which is the largest and only comprehensive source of all publicly listed properties for sale. Whether you are buying or selling, having access to the MLS will provide you with the highest exposure and the most numerous options." Andrew Weinberger, Founder and CEO of PropertyClub "When selling, there are two main benefits of using a realtor: better marketing and the insight and experience to properly price your home. Basically, you'll need a realtor to get your listing out there, as without one you probably can't get on the MLS or reach as many buyers through various listing sites. A realtor can also help you properly price the home, which is a big problem with FSBOs. That being said, almost all the FSBO/assisted FSBO startups use realtors, even if they're a flat fee service. You just can't get the same marketing if you're not associated with an MLS. Another reason many sellers use an agent is due to the fact that selling a home is stressful and an agent can essentially make everything go seamlessly. This level of service is something assisted FSBO startups don't provide as their agents usually list your home (giving you access to the same marketing as a full-service agent), but do little else as you're generally expected to show the home to potential buyers yourself. My recommendation for getting the best price with the lowest fees is to list an assisted FSBO and pay an agent to run comps (comparable sales) and a CMA (Comparative Market Analysis) report for you to help you price the home. This way you pay a flat fee, saving thousands, and you have an impartial agent helping you price the home properly." 9. Full representation Corey Fager, Owner of Buying Houses Nashville "A good realtor should offer full service representation, which will include pulling accurate neighborhood comparable properties, giving input on pre-listing upgrades or repairs (like paint colors, decluttering, staging, etc), taking care of photography/videography, and taking the lead on negotiations once an offer is received. A realtor owes you, their client, fiduciary responsibility and full disclosure. An experienced realtor can and should more than cover their commission by assisting in the details like price per square foot, title insurance, seller-paid closing costs, and negotiating repairs; not to mention the more complicated details like inspection and contingency periods. From my experience buying as an investor and also as a realtor, these alone are worth their commission." Mark Block, Director of Sports/Entertainment and Luxury Sales at The Agency "The listing agent should know the local market so that you don’t list too low or high which has major drawbacks. The agent can qualify buyers before letting them into your home. The agent can market your property and make sure that it is presented in the best light to the most buyers and agents possible through print ads, mailer eblasts, and internet ads, to name a few. Also when it comes to negotiation, both sides can benefit from having an agent. As one CEO of a Fortune 500 company told me, it is easy to negotiate multi-million dollar deals in business, but when it gets personal it is very different." 10. Agent fees can be negotiated Ben Mizes, CEO of Clever Real Estate "The average home seller pays between 5% - 6% of their home's sale price to the two agents who sell their house (both the seller's agent AND the buyer's agent). That's a lot of equity you've built up over time, gone in the blink of an eye! Most people don't realize that commissions are negotiable. You can usually talk the agent down to 1% or 2% and save thousands. Agents can be expensive, but they also rely on you for business, so don't be afraid to negotiate. In hot areas where homes fly off the market, there's simply no reason to pay the full 6% commission."
Buying your first home is one of those milestones that you build up to for years. There are many questions to ask before making such a big commitment: Am I ready? How do I start the process? Do I have enough money saved? There are a lot of i's to dot and t's to cross. And, unfortunately, watching HGTV isn't enough to fully prepare you. Thanks to the assistance of over 10 real estate experts, we have created a house hunting checklist guide that will make your house hunt easier. Eventually you'll have the confidence to tackle the home buying process like a pro! Let's get started, choose one of the five house hunting tips to dive deeper into or start from the very beginning. Get financially fit Build a strong real estate team Get a full pre-approval Evaluate what type of home you want Determine your priorities and deal breakers 1. Get financially fit Not everyone knows how much money is enough for a decent down payment. There are misconceptions about the importance of credit scores as well as income requirements that can affect your loan approval as well. Consistently save for your home Regardless of how soon you plan to purchase a house, it is beneficial to put aside a certain percent of your income to ensure that saving money becomes a consistent habit. Saving at least 20 percent of your income is a good place to start. Depending on the housing market and your income, you could potentially be ready to purchase a home in the next 12 to 16 months. If a 20 percent savings goal is unrealistic in your current situation, you can put aside a smaller amount for a longer period of time. When saving money to buy a house, it is also important to factor in closing costs in addition to the down payment. This is going to call for more money out of pocket—further planning and budgeting is essential. Closing costs usually account for about two to five percent of the purchase amount on the house you are closing on. Work on your credit score Your credit score plays a significant role in the loan process. Although credit score requirements vary based on the type of loan and loan agency, anything below a 620 is most often considered poor. Having a credit score above 620 is going to increase your loan approval odds. Be aware of your credit score and do everything you can to increase it in order to get the best rates possible when house hunting. Senior Loan Officer Kim Hankins advises prospective homebuyers on specific ways to protect and improve their credit score: Treat your credit score like your adult GPA, and be organized and conservative with your finances — that’s all a lender could ever dream. First-time homebuyers often overlook the importance of a strong credit score. An 800 credit score is more valuable than $100,000 in the bank. search How to strengthen your credit score: Open credit ASAP — just two cards Don’t charge more than 30 percent of the high limit Pay monthly to 10 percent of the high limit and do that again and again Avoid late payments Determine how much home you can realistically afford Utilize financial calculators and consult with lenders about your financial situation to determine a reasonable loan amount and price cap. John Bodrozic, Co-Founder of HomeZada, recommends doing thorough research of the costs associated with homeownership: Use mortgage calculators to estimate your monthly payments and estimate the annual household expenses such as utilities, property taxes, and preventative and normal repair costs. Once you have these numbers, then you will know what price range of a home your finances will support. This method makes sure you are looking for house that is within your budget, versus getting emotionally attached to homes you really love but financially you cannot afford them. It also helps you be a more competitive and ready buyer because once you have the financial aspects down, you are ready to move quickly when you find a home that works for you. Other competing buyers for the same home may not have their financial house in order so you can move quicker with your offer. 2. Build a strong real estate team Shop around before committing to a lender Doing research, talking to loan companies, and getting quotes is going to be the best way to discover what lender and loan type is best for you. You can consult our list of top-rated lenders to learn more about specific lenders and what they offer. There are also several loan types, so it is important to find the one that best fits your individual situation. Determining factors on loan choice include loan length, payment choices, credit score, and interest rates. Keep in mind that not all lenders offer all loan types. Kendra Barnes, Founder of The Key Resource, offers her best house hunting tip for lender shopping: How to comparison shop for a home loan: search How to comparison shop for a home loan: Shop around. Most buyers go with the first lender they call because they aren’t aware that they can shop around! Just because a bank gives you a pre-approval letter does not mean you have to stick with them! Ask about incentives. Ask the lender if they have any incentives such as lender credit at closing or fee waivers. Make them compete for your business. As you’re shopping around, be sure to tell each lender you call what the other lender is offering. Ask them if they are able to match or beat that lenders’ terms. Find a realtor who is a good fit House hunting is demanding enough. Consider using an expert real estate agent to guide your decision making every step of the way. They can take the pressure off of you by helping you find houses that are in your price range and meet your expectations. They also have extensive experience in the process as a whole, so they are invaluable resources for questions and advice. But every realtor is not a good fit for every buyer, there are practical considerations to keep in mind when choosing a real estate agent. Shawn Breyer, Owner of Breyer Home Buyers, describes what buyers can do to maximize efficiency and success within the realtor-client relationship in a fast paced market: You should be find properties online and then do a drive-by as soon as possible before reaching out to your realtor. When you do this, you will quickly weed out homes that don't match your criteria. Imagine that you're trying to find a home in a well-maintained neighborhood and a couple of the neighbors have cars parked in the yard that they are working on. These are things that Google Maps or the listing may not show. You will weed out properties much quicker with this approach while respecting your realtor's time by not making them meet you at houses that you instantly realize you don't want to buy when you pull up. In a competitive market, speed is king. Find a highly recommended property inspector Alex Romanov, iwillbuyhouse.com Co-Founder, emphasizes the importance of an oft-overlooked aspect of house hunting: Prior to house hunting, every buyer should find a highly recommended property inspector. A careful property inspection done by an expert can save you tens of thousands of dollars of costly repairs. Therefore, the top inspectors are highly sought after and are often booked for weeks in advance, so it helps to get one on your team as soon as possible. 3. Get a full pre-approval Prepare paperwork and complete a loan application Senior Loan Officer Amy Tierce describes why it's smart for prospective buyers to work with a lender from the very beginning: Speak with a competent mortgage lender if the borrower is not looking to purchase for as long as a year out. Why? Because there are many items that can impact qualification, starting with credit. If there is a error on the credit, getting it corrected can take weeks, which is often too late if you have an accepted offer on a home. Self employed (Schedule C) buyers need to look at year over year income and may want to change the way they file to maximize income. Multiple asset accounts or complicated down payment strategies may also need to be addressed. For example, if a borrower is getting a gift, or has money in a trust or other financial vehicle, some adjustments may need to be addressed prior to buying. Imrad Poladi, Vice President of NextHome, describes what the ideal pre-approval process looks like: It's been said before, but having a complete pre-approval process with a reputable lender is critical in the early stages of a home search. Buyers should aim to have as deep of an approval as possible. Do your best to get what is known as underwriting approval, which basically means that the buyer has been vetted to buy a home up to a certain purchase price and all that is left to do is find the right home. The lender sees no current red flags on providing the buyer a home loan. Talk to your lender about buying down your rate Poladi also suggests buyers look into buying down the interest rate on their loan: Depending on the type of loan, every $1,000 negotiated down only saves the buyer a few dollars per month. But if the buyer buys down the rate, the savings could be far more significant on a monthly basis. I suggest that a buyer talk to an agent and/or lender for further clarification on how this would work. 4. Evaluate what type of home you want Before deciding what you want and need in your new house, it's a good idea to compare the pros and cons of buying a move-in-ready home versus a fixer upper. Compare the benefits of a turn-key home or fixer upper John Bodrozic, Co-Founder of HomeZada, explains how buyers can compare the implications of the choice between a turn-key home or a fixer upper: search How to choose the right kind of home: Turn-key — A ready to move-in house commands a premium purchase price. So as an example, with a $400,000 house with a 20 percent down payment of $80,000, your mortgage would be $320,000. At current market rates, with a 30-year fixed-rate loan of 4.5 percent, the buyer’s monthly mortgage payment would be $1,620 and you would pay approximately $263,000 in total interest over the 30-year loan. Fixer-upper — Let’s assume the same size home might sell for $325,000. A 20 percent down payment would be $65,000, which would be upfront cash savings of $15,000. The mortgage would be $260,000, which at the same 4.5 percent interest rate would be a $1,317 monthly payment, which is a savings of $303 every month. The total interest on this loan would be $214,000, which is an overall $49,000 savings from the other scenario. The ability to pay for those renovations could come from the savings in down payment along with the savings over time of having a lower monthly mortgage payment Realtor Tania Isacoff Friedland of Warburg Realty weighs in on the question of how much capital and time is realistic to invest in a property: Some first-time buyers think they'll like the excitement of a renovation, but it's important to take into consideration the realistic cost and time involved to complete the work. In addition, renovating to your taste level or specifications is not always what someone else will want, so I caution first-time buyers doing a renovation not to "over-renovate" and to keep things simple. When it comes time to re-sell, no one wants to overpay for someone else's renovation. Many first-time buyers don't have the time or energy to endure a renovation and will pay up for modern conveniences in a new development. Don't be misled, as there's still work to be done in new construction aside from decorating. For example, you will most likely have to outfit the closets and wire for audio-visual technology. Determine what home and yard maintenance you can handle Realtor, Broker, and GRI Frances Dawson reminds first-time home buyers to consider yard maintenance: One common pitfall for first time homebuyers is not considering the maintenance of properties compared to the time they want to spend. A condo or townhome has a monthly fee for maintenance, but frees the homeowner's time for other pursuits. A property with a big yard or acreage, while appealing, can quickly become an overwhelming drudge or an expensive chore to hire out. 5. Determine your priorities and deal breakers Dream up what you want (and what you don’t)! Knowing what you want may sound like the easiest task of them all, but this can be difficult to decide, especially if you are buying a house with someone else. If that is the case, our best house hunting tip would be do find middle ground on both your wishlists. Here are a few questions that you can asks yourself to nail down your must-have for you potential home. Do you want a quaint, petite house? A large, sprawling one? How many bedrooms are you looking for? Where do you want the house to be located? Do you want a big yard? Do you want to live in a populated neighborhood or a secluded area? And underlying all of these important questions: do your wants match your price range? If you know what you want ahead of time, the process of buying a house is going to be less grueling. If you are buying the house with someone, make sure you communicate with each other your deal breakers. Decide together what you can and can't live without to create a vision of your future home. Realtor Tracey Hampson recommends the whole family participate in this part of the house hunting process: I always recommend doing a want list and a need list with the whole family. It helps so much! I wish my previous buyers had listened to me and done this. We had been looking for homes for about six months and they finally decided on a gorgeous home, but when they told their children they burst into tears because they did not want a swimming pool! I know, what kid doesn't want a swimming pool? So including the whole family is always a good idea! Aside from the essentials (i.e., number of bedrooms, bathrooms, square footage), some home features to consider when you're making your wish list are ceiling height, closet space, versatility of the space, proximity to schools or work, gated communities, outdoor space, as well as additional storage in the building. Study cities and neighborhoods in-depth Suburban Jungle Founder and CEO Alison Bernstein shares three recommendations for town and neighborhood hunting: search How to find the right location for your home: Don’t prioritize the house over the town in which it resides. The goal is to find a place where the culture and values of the town match yours. You can always trade up or down for a new home, add a third bathroom, or renovate a basement. Don’t excessively limit your search area by your commute. Just 10 more minutes on the train or bus could perhaps score you a lot more for your money. Don’t over romanticize walkability. Often, buyers coming from more urban centers feel they need a house as close to the shops and restaurants as possible. The reality is that schooling, sporting events, and other activities often take place out of the town center, limiting the importance of this feature. From a purely non-subjective standpoint, House Heroes Co-Founder Earl White recommends looking into neighborhoods that are most likely to hold value over time: Nobody wants to buy property in the process of depreciating. Sales comparison prices and online estimates look back in time, not forward. The clearest sign that a neighborhood will continue to hold its value is average days on the market. The days on market part of a listing tells you how long properties take to sell - it is an objective measure of neighborhood demand. If properties are sitting around for long periods of time at a certain list price, market values will fall below that price. When houses are "flying off the shelf," it's a good sign values will be stable or even appreciate. Similarly, regardless of sales comps, if houses are sitting on the market and not moving, it's a sign prices are on the way down from those list prices. Take a deep breath Are you feeling overwhelmed? Second-guessing your pursuit of buying a home? Focus on the benefits of homeownership It's a big deal to buy a home and there's a lot to consider and prepare. If you follow these steps and are in a financial position to purchase, you can do this! Real Living Reserve Realtors Associate Broker Christine Allocca brings attention to the fact that paying a mortgage has significant benefits over paying rent: Remember that comparing a rent payment to a mortgage payment is not apples to apples. New home buyers can deduct mortgage interest on up to $375,000 of debt for individuals and up to $750,000 for married couples. Additionally, rents always go up in the long term while mortgages don't. Steve DiMarco, President of Key Mortgage Services, reminds first-time buyers of the long-term benefits and achievability of homeownership: While it's a seemingly large investment at the time of purchase, this is an investment in your future and your overall wealth. The investment goes beyond the physical home. You're not just purchasing a piece of real estate, you are building wealth. Homeownership is the first very important step toward that wealth creation. I tell first-time buyers that they are overlooking how achievable homeownership is. There are so many programs for first-time buyers - programs that require as little as three percent down. That's a few months of savings right there to get you into your home. Don't forget to get your handy home buying process checklist below.