10 Tips for Buying Your First Home
As we look back over the years, the real estate market has rarely—if ever—been as competitive as it is today. Now that we’re in a true seller’s market, today’s real estate circumstances can be overwhelming for first-time homebuyers. As a matter of fact, millennial homeownership rates are down well below Generation X and Baby Boomer rates, and it’s even caused some people to ask how people afford a home in today’s market.
If you’re entering the market for the first time, it’s OK to feel nervous. We’re here to help. By following the right strategy, you can improve your chances of making a great offer and standing out against the competition, ultimately getting into a home you love.
10 Tips for Buying Your First Home (In Pittsburgh and Throughout the US)
Here are a few strategies you can leverage to help you buy your first home in Pittsburgh and around the US:
1. Work with a talented and knowledgeable agent. This one may seem the most obvious, but it’s also one of the most important, especially those words talented and knowledgeable.
The vast majority (75%) of homebuyers work with the first agent they interview. Only 15% decide to interview a second agent.
But not all agents have the same skills, and some can provide much better service than others.
While feeling out your options, some questions you can ask real estate agents include:
How many houses have you worked on in the neighborhood I’m interested in?
How strong are you at negotiations? How much do your clients pay compared to the asking price?
Do you have any reviews you can share with me?
The better your agent, the better the results you’ll see.
2. Look for off-market deals. Many buyers start their home searches on sites like Zillow or Redfin. That’s perfectly reasonable, given how conditioned we are as consumers to use the internet for shopping.
But these sites don’t always have the best deals for you. In fact, even the MLS, which is an exclusive online service your real estate agent uses, may not have everything.
That’s because there will always be off-market deals that never make it into platforms like Zillow or even the MLS.
Places to look include:
Facebook Marketplace
Your church and other local organizations
Local brokerages
Your real estate agent’s personal network
Your lender’s personal network
At New Local Realty, for example, we often have access to off-market deals before anyone else.
And these off-market deals are valuable because there’s less competition, meaning you can often move in at a lower price point and less negotiation. Contact us to learn more about our opportunities to buy a home.
3. Explore all of your mortgage options. Conventional loans get most of the attention, but many lenders have a variety of loan products available to homebuyers. This includes:
FHA Mortgages - About 46% of first-time home buyers use an FHA mortgage because they’re designed for people who don’t have a lot of cash or who have low credit scores.
VA Mortgages - These low-rates mortgages are often available with a $0 down payment!
First-Time Homebuyer Programs - You can find these in a variety of locations. Allegheny County, for example, occasionally offers low-interest, fixed-rate mortgages—when funds are available.
Talk to your lender to explore the best options for your unique financial situation.
4. Work with a local lender. The big box mortgage lenders and online services pay a fortune every year for advertising, and their messaging certainly seems compelling.
Unfortunately, we’ve seen countless scenarios where their deals were literally too good to be true. In fact, their accelerated processes are often filled with inaccurate data that ultimately hurts the buyer and ruins the entire transaction.
That’s why we always recommend working with a local lender. A local lender’s financial success depends on your success as a buyer, which means they have more incentive to help you get a better deal.
Plus, they’re more likely to have a deep understanding of local trends, laws, and regulations that can impact your purchase.
Bottom line: Working with a local lender improves your chances of a successful purchase!
5. Strengthen your credit score. A conventional loan generally requires a credit score of 620, but the higher the better. Getting to 740 or higher, for example, can really start to unlock better rates.
Here are a few ways you can quickly improve your credit score:
Consistently pay your bills on time.
Deal with collection accounts.
Use credit for rent and utility payments.
Dispute credit report errors.
Your lender may also have some recommendations on how to quickly boost your credit score, and they may also have some insight into whether or not those quick moves can boost your score high enough and fast enough to make a difference before you start shopping around.
6. Explore all of your options geographically. If you have your heart set on moving into a specific neighborhood, consider opening your search by a few blocks in all directions. A few streets can make a huge difference when it comes to price.
Take Pittsburgh’s Mt. Washington, for example. Houses on Grandview Avenue, the stretch with the best view of the city, often cost $500,000+. But just a block over, you’ll find tons of 3-bedroom homes listed under $300,000.
As another example, just check out Lawrenceville and its surrounding neighborhoods. It’s not unusual to find a 3-bedroom home in Lawrenceville going for $400,000-$600,000. But similar homes in Garfield and Stanton Heights (right next to Lawrenceville) are available for less than $250,000—while still putting you in close proximity to Lawrenceville’s shops and culture.
A little flexibility goes a long way!
7. Go in with an open mind. You might have your heart set on a few different features, and that’s great! Wanting a bedroom skylight and off-street parking is perfectly fine, and those details are extremely useful to your real estate agent.
But keep an open mind as you explore your options.
Not every available home on the market is going to be capable of meeting your desires. Your ability to compromise could spell the difference between a quick and painless home search and a long, arduous mission.
8. Get a pre-approval letter. A pre-approval letter is essentially proof from your lender that you’re approved to borrow up to a certain amount.
This can give you a little extra firepower in negotiations because you can back your offers up with real dollars.
9. Be aggressive. The current real estate market is ultra-competitive. A few months ago, we were seeing homes go for tens of thousands of dollars over the asking price.
And although there are some signs that those trends are calming down, it’s still beneficial to be aggressive.
For example, making a strong offer early on, writing in an escalation clause (which automatically increases your offer depending on other offers), and staying in front of sellers can help you come out on the winning end.
10. Set a budget and stick to it. This is one of the most important steps because if you spend too much on your home, you’ll become “house poor”—when you spend so much on your monthly mortgage, you don’t have enough cash left over for anything else.
And even though you may be pre-approved up to a certain dollar amount, that does not mean you should spend the entire dollar amount. Remember: You’re approved up to a limit your lender thinks you can realistically pay back. That doesn’t always mean you’ll be able to pay back the full amount comfortably.
Instead, work with your lender to figure out a monthly budget that makes sense for you—then avoid going over it. And don’t forget to factor anything in. You’ll need to cover:
Monthly mortgage payments
Monthly insurance payments
Annual taxes
New furniture (if necessary)
Repairs and upgrades (if necessary)
Annual repairs and upkeep expenses (as needed)
Keeping all of these costs in mind can help you transition into becoming a successful first-time homeowner.
Get Help Buying Your First Home With New Local Realty
At New Local Realty, we stay on top of the latest real estate trends to ensure we always have the best access to the best deals for our buyers.
And with our experienced team of real estate professionals, we can always ensure the highest level of service for our customers!
Contact us to learn more.
