A Guide for 1st Time Homebuyers

KB Home understands home buying, and we know many tough but crucial decisions need to be made. Sometimes for first time home buyers, the process can get downright overwhelming. Never fear, though! We are here to help. We’ve compiled a handy little first-time homebuyer’s guide that runs down what you’ll need to get your ducks in a row, complete with plenty of resources.

Get Financed: Understanding Loan Options 

Unless you plan on paying cash for the home, your first order of business should be to contact a mortgage specialist. But, as with anything, don’t pick the first one that pops up in Google. You aren’t obligated to work with the one your bank provides, either.

There are many different loan types to consider and shopping around to find the right loan for you, and the mortgage specialist you feel has your best interests at heart, makes two things possible. One, you will gain a better understanding of the loans out there. Two, you will understand which option meets your long and short-term goals, and you will be prepared to identify the best deal. Every loan consists of three main yet distinctive factors. One factor defines the loan’s rate, another its type, and the final factor indicates its size. Below is a very brief overview, but for a broader explanation visit The Homebuying Institute.

  • Fixed rate or adjustable rate:

All loans will fit into one of these two categories, but a hybrid option is also available. The “rate” in question is the interest paid on the life of the loan. It can either be “fixed” and never change or “adjustable” wherein the rate changes yearly or after a set number of years (thus making it a hybrid).

  • Government-Insured or Conventional loan:

In addition to deciding between a fixed rate, adjustable rate, or a combination of the two, you’ll also need to decide if you want your loan to be insured and guaranteed by the federal government or not. Of the government-insured options there is the FHA, the VA, and the USDA. Each is tailored to meet specific needs and have their advantages and disadvantages.

  • Jumbo or Conforming loan:

These terms describe the size of your loan based on criteria set by Fannie Mae and Freddie Mac. Jumbo loans are considered a higher risk for lenders and often come with additional requirements.

  • Resources for a first-time homeowner loan:

As a first-time home buyer, once you’ve narrow down your mortgage options, you should also consider your state’s available assistance programs for first-time buyers. As you do your research on loans and the right mortgage professional, another great tool is a mortgage calculator, available on banking sites and home search sites like Zillow and Trulia. This tool takes various loan details and calculates your monthly payment, allowing you to experience the differences the options can make. We invite you to check out the KB Home mortgage calculator.

Real Estate Agent or DIY 

We previously detailed the pros and cons of first-time homebuyers working with a real estate agent versus flying solo. If you have decided you’d like the help of a professional, it is important to take the time to find an agent that is right for you. Buying a home is a deeply personal experience. Ask friends and family in the area for their recommendations or check out sites like Zillow’s Agent Finder, Redfin, or Trulia’s agent Directory.

Deciding on Personalized or Quick-move homes:

  • Option 1: KB Home builds your dream:

Perhaps you’ve tried the traditional route of looking at homes in your area and working with an agent, but either things didn’t pan out, or you didn’t find anything that met your needs. Now what? Why not build your home? What was once an option only available to a few, has now been made accessible and affordable. KB Home’s personalization experience is one example where you can get financed, pick a floor plan and a community that fits your needs, and then personalize the home for your family and lifestyle in the KB Home Design Studio. Here, a Design Consultant will help you pick the flooring, fixtures, finishes and personal touches that make your home unique.

  • Option 2: Quick-move:

Quick-move houses come ready for you to move in and make into a home. There are two types of quick-move homes, new and resale. A new home has been constructed with the latest the builder could offer, which could mean energy efficient features like solar panels, tank-less water heaters, low-VOC interior paint and carpet, and Energy Star appliances. A new home and many of its built-in features will also come with a warranty (an extra expense on resales), and will often be a part of new and growing communities. If you think a new, quick-move in house is ideal for you, KB Home has a limited number available in each of their communities. Contact a sales office today for details.

A resale home is not without its benefits, however. Depending on your personal aesthetics you may prefer a home built in an older style or that has historical significance. Older homes can take extra work in regards to maintenance and repairs, but many people enjoy a home they can customize or “fix-up.” Some families may also prefer the more established neighborhoods and communities of older homes, and as always you should look for a home that meets your convenience needs to local resources such as, grocery stores, hospitals, preferred schools, and commute times—to name a few. Resale homes will often cost less per square foot than a new home, but updating for energy efficiency or more modern features can become costly.

Speaking of features, this brings us to our next step on our first-time home buyer’s guide.

Features: Create a list and check it twice 

Before you even begin your home search, you’ll want to create a list that prioritizes “must haves,” “nice to haves,” “neutral,” and “absolute no’s.” This list will allow you to organize the criteria you’ll place on each home in your search and help you compare your findings. It’s also important to understand that as you go through the process, the list will likely evolve as your preferences change. Here are a few things to consider.

  • Space:

Consider what space you’ll need for the future you define. It may be based on the next 5 or 10 years, or it may be based on your phase of life. Are you newlyweds, starting a family, combining families, or empty nesters? How big does your house need to be to accommodate this future?

  • Features:

Make a list of what your perfect home will provide you and your family. Do you need a two-car garage? Do you need a fenced in yard for your fur-babies? Will you need handicap railings or ramps?

  • Energy efficiency:

Many first-time home buyers don’t realize the effect their home’s utility bills will have on their monthly budget. Larger houses will take more energy, and older homes can often present issues if they haven’t been updated. Make a list of energy efficient features to look for in homes like Energy Star appliances, solar paneling, or tank- less water heaters. In a previous post, we discussed the money you could potentially save with an energy efficient home.

  • Schools:

Depending on your stage of life or future needs, this is important for many families. Whether working with an agent or searching for homes online, school district zones are readily available. Sites like GreatSchools.org are a great way to compare public, private, and even some daycares in your area with very thorough rankings and reviews.

  • Commute times/local transportation:

Do you drive to work, take a bus, participate in a ride share program, or take the train? Your home’s accessibility to these options is important. Some sites like Trulia will provide a “commute calculator” that you can use during your search.

  • Community & Neighborhood:

With so many community features to think of—pools, clubhouses, playgrounds, and parks—make a list of the type of neighborhood and community you want to be a part of. Also, make a list of how close you feel comfortable being to the local gas station, grocery store, post office, emergency services, and hospital. Nightlife, fitness centers, shopping, and restaurants all become key factors to consider as well. Both your home and neighborhood should meet your lifestyle so write these details down!

Prepped and Ready to Roll! 

No matter the path you choose to finding your dream home, prioritizing your needs and wants will quickly become second nature the more homes you view and visit. Before you know it, you’ll be unpacking boxes and settling into the house that you will turn into a “home sweet home.”