If you are buying a home for the first time, where do you start?
Before you do anything else, try and figure out realistically how long you are planning to live in the home you are about to buy.
You do this first for a couple of reasons.
First of all, there are closing costs when you go to sell again. It might take 3 years before a home gains enough equity to pay closing costs on a sale. So if you go to sell the home in under three years, you may have to bring money to the table to pay the closing costs on the next sale. Leaving you at square one again when you go to buy the next home.
So the upshot is, do I plan to live in this home for three or more years?
For example, you just took a new job in a new city. Everybody is telling you that you should buy instead of rent. I would say make sure you like the place first before you make that call.
So rent for a year in the place you think you would like to live and see if it meets your expectations. It might turn out that after living there for a year you discover that there’s another part of town that suits your needs better, or that you like better.
Alternately, you might find out the job or the city isn’t the best fit. If that’s the case you don’t have to go into a hole selling a property that you’ve only owned 12 months.
Next, the chicken or the egg question of do you find a Realtor or a loan first, and what type of home should a first time buyer look for.