For most first-time buyers, purchasing a home is the biggest purchase of their lives—but according to a recent survey, the majority of them don’t exactly feel prepared.
A recent article from REALTOR Magazine outlined a survey from a first-time homebuyer survey from real estate resource Framework, which found that the majority of first-time homebuyers feel unprepared to buy. According to the survey, only 41 percent of first-time homebuyers felt prepared for the home buying process, while 44 percent said they feared making a costly mistake. And more than half of all first-time buyers—both prospective (58 percent) and recent (53%)—said the home buying process was more difficult than it needed to be.
What does this mean for you? If you’re buying a home for the first time, you want to feel as prepared as possible—and that means working with a qualified real estate agent. The right agent will help you feel prepared for every step of the homebuying journey—and make the entire process of buying a home feel less complicated and difficult.
If you’ve only ever rented before, the necessity of a home warranty may be unknown to you. As a renter, you are used to a landlord who will fix any issues you run into – but that all changes when you become a homeowner. Now, when a water heater breaks or the fridge starts to leak on the new floors in the kitchen, there is no landlord to call. So what do you do now? You may have a friend or family member who can handle the smaller fixes, but when it comes to the big issues that will end up emptying your pockets, a home warranty can save the day.
A home warranty is similar to insurance, as it covers some or all of the costs of replacements or repairs when a system in your home malfunctions or stops working altogether. They range in annual costs of $300-$900 and remove the middle man in the fixing process. Instead of finding someone to fix an issue, you will directly contact your warranty provider and they will set up the repair or replacement with the appropriate vendors. Your premium usually covers all costs, with the exception of a co-pay which is typically around $50.
If you’re wondering who should buy a warranty, they are usually recommended for first time home buyers who have rented up until that point. When you are used to having a landlord, a home warranty can fill that role in a different way. Home warranties are great for homes with both members in the workforce outside of the house or just busy family members who can’t always be home to wait for the repair person window or find the time to even get quotes for the best repair shops in the area. Home warranties aren’t just for first-time buyers, though. If your appliances are nearing the end of their life expectancy, now would be a great time to get a warranty. If all of your appliances were purchased in the same time frame, you don’t want to face the costs of them all failing at the same time. Warranties can save you time and money, especially in the first year of ownership.
If 2020 is the year for you to buy a home, consider making these 5 New Year’s resolutions to help you be as prepared as possible to become a homeowner.
1. Cut down on monthly subscriptions
With each month, there is a new subscription service out there. What starts as convenience turns into an endless list of subscriptions that we often don’t use enough to justify the costs. Sit down and go through your monthly/yearly subscriptions and cancel whatever you don’t use. Set aside that extra money with the rest of your savings so your down payment can continue to grow.
2. Build a better credit history
Paying bills on time and paying off debts will help create a solid credit history. Make sure you have some utilities or rent in your name so that you can pay them on time and continue to build a solid credit history.
3. Avoid changing careers
Alongside income, your employment history will be a major factor during your mortgage application evaluation. While a new job could be a good career move, most evaluators are looking for a steady job history with little to no gaps in your employment over the last few years.
4. Check your credit
If you don’t know where your credit is at currently, now is the best time to check. Most credit sites will tell you what is impacting your credit, and you can use those tips to change your choices heading into the new year. If large debts are negatively impacting your credit, get started on a pay off plan so your score can improve in the new year.
5. Avoid large purchases
Your debt-to-credit ratio makes a major impact on your mortgage approval. If you buy a brand new car or fund a large vacation, that ratio could sway in the wrong direction. If you want your lender to be willing to give you the maximum amount possible, make sure you aren’t making any large purchases heading into the new year.