the Editors at Realtor.com - The Essential First-Time Home Buyers Book: How to Buy a House, Get a Mortgage, And Close a Real Estate Deal

Copyright 2019 by Move Inc.

All rights reserved. Published in the United States.

Book cover design by Teri Joe

Book cover photograph living4media/Bjarni B. Jacobsen

Photos of the homes in Chapter 7 are courtesy of iStock and the following photographers: Marje (bungalow), jhorrocks (Cape Cod), lillisphotography (Colonial), cirano83 (French country), Greg Chow (mid-century modern), RyPle (ranch), csfotoimages (Spanish), EricVega (townhouses), quackersnaps (Tudor), ksmith0808 (Victorian).

Acknowledgments: We are indebted to the many writers who have contributed to this book: Liz Alterman, Daniel Bortz, Angela Colley, Maureen Dempsey, Cathie Ericson, Audrey Ference, Margaret Heidenry, Jamie Wiebe, and others.

Introduction

Are You Ready to Buy a Home?

Theres no place like home.

The Wizard of Oz

If youre looking at this book, youre probably hoping to buy a homeperhaps your first. Or maybe you have purchased property before, but were overwhelmed by the process and want more guidance this time around. In either case, youve come to the right place!

Lets face itbuying a house is a life-changer. Do it right, and youve scored a sweet retreat from the worlds uncertainties. Pick the wrong place, however, and it could land you in a money pit or a neighborhood you hate, where you will be stuck for awhile (homes dont come with refund policies).

Bottom line? Buying a home is not an impulse purchase, but one that should be pondered carefully. To test just how prepared you are, ask yourself these five questions to see where you stand.

Question #1. Can you afford a home?

The first step is to find out whether you can buy a house, given your current financial situation. Is your income high enough? Are your debts and other expenses under control? If you want some help with the number-crunching, plug your income and expenses into an online home affordability calculator to get a sense of whether you can afford a home and how much money you should spend.

Question #2. Does it make sense to buy rather than rent?

The whole Rent or buy? question depends on which housing market youre in, because prices and inventory can make a huge difference. The good news is that an online rent vs. buy calculator can crunch the numbers for you. Youll enter the rent youre currently paying (or are able to pay) and the ZIP code you want to live in. What youll get: a comparison of the cost of buying a home, versus renting in that area.

Question #3. Are you planning to stay put for a while?

Generally, the longer youre going to be living in a home, the smarter it is to buy rather than rent. As a rule of thumb, home buyers should plan to stay put for at least five years. If you already know that you are likely to move in that time frame, you may have your answer: Stick with renting.

Question #4. Are your retirement savings on track?

We know, we know: Retirement seems a long way off. Still, its crucial to start storing those nuts early. So if youre neglecting your 401(k) to funnel all your funds toward a home purchase, that may not be the best allocation of resources (particularly if your employer matches funds, which is free money).

Another reason: Setting aside money in a retirement account must be done the year you earn that income; you cant go back later with a wad of cash and hope to squeeze it in.

Heres some good news: Much of the money you put into a retirement account like an IRA can be withdrawn for a first-time home purchase, provided you meet certain requirements.

When in doubt on what to do, consult a financial adviser who can help you strike a balance between saving for a house and your future.

Question #5. Are you ready for the responsibility?

With a rental, you can just call your landlord to fix that leaky faucet. With a home you own, its all on you. So ask yourself if youre willing to forgo weekend bar crawls with friends in order to mow the lawn or patch the roof.

All that said, there are low-maintenance homes you can own: Condos, for instance, require less upkeep, because you pay for others to take care of these tasks. Still, by and large, homeownership comes with responsibilities, so you should be sure youre ready to embrace these obligations with open arms.

Ready to buy a home? How this book can help

If you answered yes to most of the questions above, then you may truly be ready to buy a homeand thats where this book comes in.

Whether youre a first-time home buyer or a repeat customer who could stand to brush up on a few skills, theres a steep learning curve when youre navigating todays marketplace. And few know this better than we do!

Realtor.com offers an extensive inventory of real estate listings. Every day, millions flock to us not only to peruse beautiful pictures of homes, but also for much-needed advice on how to purchase a place of their own. By interviewing top experts in the real estate fieldfinancial planners, mortgage lenders, real estate agents, brokers, and otherswe help guide home buyers through their journey, making sure they find the best house, at the best price, with a great mortgage, and more.

In this book, we wont barrage you with a slew of statistics or obscure terms. We firmly believe that even the most complex aspects of real estate can be explained in plain old English. Our aim is to keep you feeling confident throughout the home-buying process that youre asking the right questions, making the right decisions, and ultimately choosing the very best home for you.

So whether your version of the American Dream includes a sprawling Mediterranean mansion, a midcentury modern apartment, or a quaint Craftsman bungalow on a small patch of grass you can call your own, read on. With the right planning and prep work, its all within reach. Good luck!

Sincerely,

Judy Dutton, Editor

Chapter

The Top 10 Benefits of Buying a Home

Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.

President Franklin D. Roosevelt

Buying a home may be the American dream, but its also a monumental task: You have to clean up your credit, apply for a mortgage, visit tons of houses, scrape together a down payment, and then move all your worldly possessions after you close the deal. Phew!

So then why do millions of Americans go through the trouble? Because they know that whatever hassles they must endure are far outweighed by the benefits of buying a home.

If you need some inspiration to start house hunting or just want to make sure youre taking advantage of all that homeownership has to offer, check out this list of the top 10 perks that will repay your hard work from now well into retirement.

Benefit #1. Predictable monthly housing payments

Usually, a landlord can raise your rent whenever a lease expiresand sometimes by as much as he pleases. But as a homeowner, if you get a mortgage with a fixed interest rate, you can lock in a predictable mortgage payment for as long as 30 years.

As such, instead of worrying about fluctuating rents, Homeowners can create a budget knowing that their principal and interest payments wont rise ... ever, says Brian Davis, a real estate blogger at SparkRental.com.