I just bought my first house in 2015. Here's my tips and observations:
- Plan on seeing at least 10 houses. You'll discover that there's features that you never even knew you liked/disliked, and the more detailed you can be about your preferences, the more your realtor can help you.
- Find yourself a good realtor, they're paid out of the seller's proceeds, so it behooves you to take advantage of it, especially on your first house. They're paid to have their finger on the pulse of the market, and often can do a better job finding new listings, and obscure ones that you'd likely never find by yourself.
- Don't be afraid to switch realtors if you don't like the current one, for whatever reason.
- When budgeting your mortgage, be sure to factor in an additional 30-50% for Private Mortgage Insurance (PMI), it's required for any mortgage under 20% equity, and honorable bank or credit unions will make this easy to discover, but it's important to factor in. The advertisements never include it, so it can be a deceptive cost.
- Don't be afraid to talk to your banker. Even if you're going with a different mortgage company, it helps to talk to a real banker to discuss current options, as well as to explore how the different options, fees and rates interact.
- Monitor your credit. Use a tool like Quizzle.com to watch your credit, and help you make decisions to increase your credit rating. But don't get super stressed over getting it to 850. Anything in the 700s is great, and most of the time, 750 is the maximum to get the best rates.
- The best way to increase your credit is to ensure you always pay your bills on time, and to try to keep your debt to credit ratio between 10-25% if you can manage the diligence to handle it, maintain a rolling balance on your credit cards that's always paid off before each charge is due. If you can't manage that, just pay it off every month. It's better to have a paid off card than to start racking up interest charges.
- Be sure to factor in property taxes, home insurance, and HOA dues, if applicable. Depending on your bank and title/escrow company these costs may be rolled into your monthly mortgage payment, or they may not, find out!
To give you some realish numbers:
I got a ~250k mortgage, after my down payment, and am currently paying $1650/m to the bank/escrow company.
That currently pays ~1200/m to the bank to cover P&I (Principle and Interest)
plus another ~450 to cover PMI, Property Taxes, and hazard insurance (AKA Homowners insurance)
Works out to
1200 to P&I __96 to PMI _325 to taxes __50 to homeowners ins.
- Factor in another 25-50% for utilities. sometimes Zillow will show estimated utility costs, but it helps to do your own research.
Heating fuel will dominate your costs in the winter, so ask the realtor, or schmooze the seller, and ask about the largest winter bill, if possible.
I only pay about $130 for the coldest winter here so far, but I've heard of others in the area being hit with 300+ bills for the same period. I seem to have a well insulated house.
From my example, based here in puget sound washington:
$130 for nat gas
$90 for electricity (I live in a cheap energy area, plan for double this, or 3-5x if you heat with electricity)
$50 for water, more if you are likely to do a lot of watering, pool filling etc.
$50 for sewer, if applicable.
$50 for garbage service, if applicable
TV/Internet/Phone is highly variable depending on your needs, so I can't factor this in for you, but again. Research!
- It seems common in my area for sewer, water, and garbage services to be billed every other month. I don't know what is common in your area, just something to be aware of Also, depending on how you're billed for your water and sewer, they may be combined, and your sewer rate may be based on your water usage. Just something else to be aware of.
- For maximum peace of mind: only budget based on assured income. If you plan on having a room mate, don't budget on that income, you may have some rough months where you don't have that income, and that can lead to some unneeded stress.
- Once you have a candidate house, talk to the neighbors. ask them if there's anything they would want to know about if they were moving in, problem neighbors, crime problems, etc.