Owning a Home: Tips for First Time Home Buyers

Buying your first home can be confusing and overwhelming, but it doesn’t need to be. Educating yourself about the real estate market and staying informed on the latest trends and tips for buying a home can make the process smooth and seamless.

Before you embark on your home search, remember that a little research can go a long way toward getting you in your new front door — and with minimal stress.

When you’re considering buying your first home, there are so many things you need to consider: mortgage rates, how to maximize tax benefits, hidden assessment fees and that’s before you even do a home inspection or deal with the hassle of moving. Even when you are working with a Chicagoland real estate broker, it helps to hear personal stories from friends, families, and neighbors who have experience buying and selling homes.

Your real estate broker will guide you through the process of searching for a home, help you place an offer that will stand out from the competition and propel you towards a successful close on the perfect home. Even so, there is much to learn from the personal anecdotes of others who have walked in your shoes already. Here are some important pieces of advice from @properties as well as Chicagoland home buyers who have already navigated the search for the perfect home — and want to help you succeed, too.

Have Your Finances and Credit in Order

@properties Christie’s International Real Estate: Before you start searching for a home, check your credit score. Make sure the facts are correct and fix any problems you discover. Be sure to determine your budget — and take into consideration hidden fees like special assessments and any home repairs or renovations you need to make once you move in. Even when you’re eager to move toward a sale, shop around to make sure you’re getting the best deals on your loan/mortgage rates.

Almost every first-time homebuyer funds their purchase with a mortgage, and getting a mortgage requires credit. The better your credit, the lower the interest rate on your loan, and that can result in thousands or tens of thousands of dollars in savings over a number of years. To achieve a good credit score, it’s important to establish and use credit accounts, but it’s equally important to properly manage those accounts.

Pay bills on time and maintain a low balance on credit cards or pay them off in full each month. You can check your credit score online through the main credit reporting agencies. And if you run into a problem, fix it as soon as possible.

Seek Approval

@properties Christie’s International Real Estate: Before you start looking for a home, it is essential to get pre-approved for a mortgage, especially in today’s competitive marketplace where there are more buyers than homes for sale. This will let you know exactly how much you can afford and make you a more attractive buyer to sellers who may be entertaining other offers. The lender performing the pre-approval will review your credit report and look at other documentation, such as paystubs, bank and brokerage statements, and tax returns. A pre-approval is not a full loan commitment.

Mary Kay H. from Gold Coast: “Get finance approval first. Find out how much of a loan you can secure, then don’t spend that much. I had great credit, so I was approved for twice the amount of my final purchase price.

I had a spreadsheet where I logged each place I looked at (51…yes I looked at 51 condos). It had built into it a multiplier that would calculate my monthly mortgage payment. I had columns to add in parking (because some were included in the purchase, but others were monthly), insurance, electric, cable, taxes, etc. to give me what everything home related would cost me monthly.

I was determined to not be house poor, but have what I needed in a neighborhood where I would be comfortable.”

Seek Help from a Real Estate Agent

@properties Christie’s International Real Estate: Find an agent you can trust to help you throughout the whole home buying process, from searching for a home in the neighborhood you desire to placing an offer that will stand out and even navigating a successful close. You don’t want to make an offer in haste before you’ve thoroughly researched the market’s availability, and your real estate broker will know the market better than anyone.

Some of the most common mistakes homebuyers make occur because there’s little awareness of the common pitfalls. Your real estate broker already knows what is necessary to prevent potential negative situations, so utilize your resources. Buyers who think they’ll save money by not using an agent usually wind up costing themselves money, and missing out on the home they want, because they don’t have someone to advise them and negotiate on their behalf. With over 3,500 @properties Christie’s International Real Estate agents in the Chicagoland area, Indiana, Michigan and Wisconsin, finding the right agent for you is a breeze.

Identify Needs vs. Wants

@properties Christie’s International Real Estate: Make a list of the features that are most important to you such as location, type of home, number of bedrooms and bathrooms, and amenities. Then separate them into must-haves and nice-to-haves. This will help you focus your search and make sure you’re looking at the right listings, especially if you’re sticking to a strict budget.

Save for those Unexpected Expenses

Kim H. from the Chicago Suburbs: “Don’t blow your budget on the house, because as soon as you move in, there’s a lot to furnish. More importantly, something expensive will always need to be repaired or replaced.

On our first day in our first house, there was a random leak where the water service from the village met up with our interior pipes. A year or two later we came home to a basement flood because our water heater had quit on us and leaked all over the floor.

If you buy an older house with original windows, it’s smart to replace them with energy efficient ones, especially if the previous owner left a sock in one to block air leaks.”

Watch Out for Hidden Fees

@properties Christie’s International Real Estate: There are many costs associated with buying a home beyond the purchase price. You’ll need to budget for things like closing costs, property taxes, home insurance and, if you’re buying a condominium or townhome, assessments/HOA fees. You’ll also want to furnish that home and budget for maintenance and repairs. Be sure to factor these items in when determining how much you can afford.

Anne C. from West Lakeview: “Find a good real estate attorney who can break down all of the condo association history, budgets and meeting minutes for you. Knowing your monthly assessment amount is one thing, but you may need to be prepared for a special assessment or a big increase depending on what that information reveals about the state of the building’s structure and finances.”

Get a Home Inspection

@properties Christie’s International Real Estate: Faults in your home may not catch your attention at first glance. When deciding to not invest in a home inspection, you’re risking incurring extra expenses and discovering hidden defects in your house. Being educated about the current condition of your home is worth the low up-front fees and will lessen the likelihood of incurring pricy home repairs when you move in.

Be careful when examining homes that need to be fixed up. You might end up pouring more money and time into it in the long run than you think.

Look for “What’s Behind the Walls”

Nora S. from East Lakeview: We bought a condo in 2009 that we knew would take a lot of work. You could just see it: ugly paint colors, battered trim, unfortunately, placed walls and even missing doors.

The important part is that the shoddy and haphazard state of what you could see foreshadowed what you couldn’t. We learned the hard way that a ‘fixer upper’ means fixing the unsexy things you can’t see.

Since then, we’ve gut renovated three rooms and have had to rebuild floors, reconstruct and add studs, rewire, replumb, re-drywall, and on and on.

The real expense is in what you can’t see because that’s the stuff that requires expertise to fix, and you just can’t do yourself. And some things you just never know until you open up walls. So from our first project on, I made sure our Boring But Important Structural Things to Pretty Visible Things budget ratio was about 2:1.

Now that the memory of how hard the renovations were is starting to fade, it feels like it was all worth it – our home is perfect.”

If You Live in the City, Consider Walkability

@properties Christie’s International Real Estate: Make sure you carefully research neighborhoods as well. Consider things like schools, nearby amenities, and access to transportation. It can be helpful to visit neighborhoods at different times of the day to get a better sense of the area. Don’t forget to consider what you’ll want in a location over time as your lifestyle evolves.

Lisa G. from North Center: “When we were ready to leave our beloved 3-BR condo in Roscoe Village (baby #2 was on the way), my husband had us do this exercise where he and I took seven or so home qualities (size, location, walkability, school district, price, etc.) and we ranked them independently, then compared our answers.

Both of us ranked home size over walkability. I think we were wooed by the home we fell in love with (lot and a half, super roomy and open, 5+ bedrooms. We took walkability for granted, having lived in Roscoe Village for 10 years.

Our new home is only 1 mile away, in North Center, and while we do love the home, we hate that it’s not really near anything. To walk to the very southern border of Lincoln Square takes a solid 20 minutes with the kids in a stroller, or (literally) forever with them walking.”

Slow It Down

@properties Christie’s International Real Estate: Buying your first home is a big decision, and it’s important to take your time. Don’t feel pressured to make an offer on a home before you’re ready, and don’t hesitate to walk away if it doesn’t feel like the right fit.

Lizz P. from Oak Park: “Homes are like partners. Make sure you can live with exactly what you see and don’t assume you can change everything you want to.”

Make Closing Time Easy

@properties Christie’s International Real Estate: Once you’ve found a home and your offer has been accepted, you’ll need to navigate the escrow process. This can typically involve significant paperwork and deadlines, but at @properties Christie’s International Real Estate we’ve eliminated much of the hassle with Closing Milestones, our proprietary client-facing portal. The technology guides buyers (and sellers) through the critical steps from contract to close, helping you keep track of key tasks and dates for items like the home inspection, attorney approval and mortgage approval.

Written by @properties
@properties Christie’s International Real Estate is Chicagoland’s #1 brokerage. Through our affiliation with Christie’s International Real Estate, our network spans nearly 50 countries. No matter your real estate needs, we’ve got you covered.