Now that you’ve decided it’s time to purchase your first home in Chicago, you might be wondering where to begin. Buying a home can be stressful, but before you even start looking, there are some valuable tips that can help make the process a little less overwhelming.
Start saving right away:
Even if you are not in the market to purchase a home just yet, you can still start saving. The more you save, the easier it will be to afford the down payment when you’re ready to take the leap. Also, by saving at least 20 percent of your future home value, you can avoid paying private mortgage insurance (PMI). What is PMI? Private mortgage insurance is a specific type of mortgage insurance that is used with a conventional loan, and protects the lender if you stop making payments on your home loan, not the borrower. PMI is only required if you have a conventional loan and put a down payment less than 20 percent, which why it’s recommended to start saving early.
Don’t rush into things:
At some point you may make the decision to purchase a new home, but that doesn’t mean you need to do it right then. Even if you are feeling cramped in your current apartment, take your time. Figure out exactly what features you are looking for in a new home. You can also benefit by searching different Chicago neighborhoods to find precisely what you want. Remember, you hope to live there for many years, so you should make sure that you are not skimping on any of your must-haves.
Start creating an emergency fund:
It is important to be prepared for any unexpected situations when you purchase your home. Start building your emergency fund several months, or even years, before you start the home-buying process.
When you’re a first-time home buyer, it is easy to be surprised by the multiple “extras” that start to appear in your monthly budget. There are expenses that didn’t exist before, such as lawn maintenance, home repairs and larger utility bills. As these costs start to add up, you’ll notice a difference in the amount of money left over each month. By saving early, some of the stress this causes can be alleviated.
The simplest way to get the best mortgage rate when purchasing your new Chicago home is to shop around. Don’t settle for the first place you go for a mortgage rate. Look into three or four different lenders and explore the various loan options, along with rates from a few different mortgage brokers. Just a half a percentage point can save a homeowner up to tens of thousands of dollars over the years.
Pay attention at the home inspection:
It is not uncommon for homebuyers to follow the home inspector around to see what he or she finds and take notes and ask questions. However, it is essential to walk around the house and check things out yourself. Even though the inspector is looking at everything, you should explore the whole property on your own and pay attention to all the details.
Have a second set of eyes view the home:
Once you have fallen in love with your dream Chicago home, you might overlook things that aren’t quite right. Unfortunately, this can cost you in the long run. It is important to bring a friend or relative to act as that second set of eyes who isn’t already invested in the house. That person is more likely to spot issues with the house that you missed and they will tell you the problems they saw.
No furniture shopping the day after you have moved in:
When you are purchasing a home for the first time, it is easy to forget that you will have a whole new set of expenses that you’ve never worried about before. Before you go crazy purchasing furniture for every room in the house, sit down and create a new budget and figure out which items are immediately necessary. Take your time purchasing furniture and shop around. Going to a furniture liquidation sale or finding used furniture will help you stay on budget, plus you can still find items that are perfect for your needs and style. Remember that not every room in your new Chicago home needs to be filled right away, no matter what your “Dream Home” Pinterest says. Take your time and save money so you can purchase the things you really want.
Know what you can’t change and what you can:
The process of purchasing a home can be very stressful and overwhelming. It is hard for most homebuyers to get through the whole process without spending a lot of money to replace or update old, unsafe appliances and systems. It can be very unsettling! As you go through the home buying process, you will find that every pre-owned home has at least one issue that will need to be repaired. Some of these you can change, but others are permanent features that you’ll have to live with.
The one thing you can’t change is the location of the home. When you purchase a home, you are not only buying the home, but also the neighborhood. Take the time to explore the surrounding Chicago neighborhood where you are looking to purchase before making an offer on the home. Make sure it has everything you are looking for and that you will be happy for many years to come.
Here are a few more first-time home buying tips:
• Make sure your credit is good.
• Pay down any debts that you have accumulated and avoid any new debts.
• Resist the urge to purchase a home that is beyond what you can afford and spend what you are comfortable with.
As you start on your new endeavor to purchase your dream home, take the time to think through all your different options, your budget, and where you want to live. Your new home should be all you want it to be and more!
For more on real estate in Chicago, go to www.ChicagoRealEstateForum.com.