5 Things First-time Homeowners Should Know

The thought of being a first-time homeowner can be exciting but overwhelming, whether you’re newlyweds looking for a starter home or just making your first big solo move this summer. Where can you find a reputable real estate agent? What is the price tag of a typical down payment? What do you need to know about mortgages, not to mention purchasing home insurance, planning for other unexpected expenses, and protecting your investment with a trusted security system?

Start by creating a wishlist for your new home to help determine a budget when meeting with a mortgage specialist and real estate agent. To further help the flow of your homebuying experience, we’ve compiled a list of first-time homeowner tips:

Find the best mortgage company

Many first-time homebuyers think securing a real estate agent is top priority when buying a house. Though you should connect with an agent well before you plan to purchase, you’ll first need to know the loan amount for which you’re approved and begin comparing interest rates for mortgage companies. Not only will knowing the loan amount determine your price point for shopping, but it will also show potential real estate agents you’re prepared to buy.

Your down payment, which is the percentage you’ll pay up front for your new home, will depend on the lender and type of mortgage you choose, as well as your finances and financial history. Planning for a 20% down payment will likely heighten your chances of loan approval and help avoid mortgage insurance. You can put down less than 20% of the purchase amount, but you’ll have to check with your lender about minimum requirements.

Most lenders require down payments since a lower investment up front signals a more significant risk. Don’t have much money saved up? Establishments such as the USDA, FHA, and VA may offer zero or low down payments; however, putting down that initial money has advantages, including:

• Better interest rates

• Lower monthly payments

• Increased initial equity in your home

• Lower up-front and future fees

Your optimal overall down payment will depend on your future goals and financial stability. Committing to a large down payment will be easier on your future monthly budget, but putting down too much up front may require you to dig into your savings if emergencies arise.

Connect with the right real estate agent

Securing a knowledgeable real estate agent who understands your needs and wants is critical. It’s equally important to find an agent with whom you feel comfortable communicating. Look for a real estate agent experienced in the location you want to buy, so they have the know-how and connections to meet your expectations in a timely manner. Ask family members and friends for recommendations, research an agent’s website and social media presence, and check out their online reviews. When you find potential options:

• Find out if those agents have worked with first-time homebuyers in the past. Typically, first-time buyers have different needs than those who’ve already purchased homes.

• Ask prospective agents if they are a member of the National Association of Realtors (NAR). This ensures they abide by the organization’s code of ethics.

• Inquire about other agent certifications, such as Certified Residential Specialist (CRS) or Accredited Buyer’s Representative (ABR).

• Confirm your potential agent is a buyer’s agent, which represents the homebuyer in a transaction and not the seller.

• Once you select a few candidates, request an interview to evaluate their experience, expertise, style, availability, and your chemistry with them. It’s also a good idea to ask an agent for references of recent clients and reach out to those contacts.

• Closely analyze your contract with an agent, including their commission, which is usually 6% of a home’s sales price. Look at the length of the contract as well. If the market in your desired locale is good, a six-month contract should be ample time to find a home. If a contract is longer than six months, you may want to consider another agent, so you don’t get locked in an arrangement with someone who can’t produce results.

• Ask your real estate agent about a property if you come across an option not listed under their company. An agent isn’t limited to the properties their firm represents and can still negotiate on your behalf.

• Check with your state’s real estate regulator to confirm your potential agent is licensed or to find out if they have any negative reports.

Purchase homeowners insurance

Don’t wait until you’re ready to purchase a home to shop for insurance. Begin the search at least 30 to 60 days before you plan to close on your new home. This will give you enough time to evaluate your needs and compare rates, so there’s no danger of delaying your closing date or pushing your monthly budget to its limits. Lenders can also recommend insurance companies, and your lender will require proof of homeowners insurance at the time of closing, so they know their investment is safe in the event of fire, flooding, or other events.

• When purchasing an insurance policy, make sure the insurance value of your home and not its market value is equal to the replacement cost of the structure.

• Check out options to bundle home and auto insurance.

• Homeowners sometimes receive discounts if they set up their policy early — a week or two prior to the beginning of coverage.

• Consider how much you’re willing to pay monthly compared to potential deductibles.

• Ask insurance companies about potential savings associated with a home security system.

Budget for home maintenance and other expenses

There’s nothing worse than moving into a new home with a shiny, new monthly budget only to have the washing machine break, the refrigerator die, or some other emergency arise. Being proactive is better than being reactive, especially when it comes to finances, so be sure to work a healthy cushion in your monthly budget or savings plan to cover unexpected expenses or additional moving or real estate fees. You’ll also want to add room in your budget for landscaping, homeowners association (HOA) fees, property taxes, pest control, and home security.

Select the right security system

No matter where you live, having a reliable home security system will give you peace of mind and protect both your investment and your family. Brinks Home™ offers a variety of products to secure your residence and its contents (including pets!) whether you’re at home, at work, or on vacation. They include:

• Door locks featuring a wireless keypad for keyless entry

• Programmable smart thermostat

• Indoor and outdoor cameras

• Video doorbell

• Smoke, carbon monoxide, and flood detectors

• Window and door sensors

• Wireless glass break detector

You can also sync all devices through Alarm.com, which allows you to remotely perform actions, such as locking your doors, turning on lights, closing the garage door, or viewing real-time security footage.

When you begin your search for a new place, reach out to Brinks Home and let us help you develop a security plan right for you. You can also explore the Brinks Home Smart Center Blog for tips after buying your first home, while you’re moving, during new-home construction, or when setting up your smart home technology.

Jason Stevens is a senior writer for Brinks Home. He is a "tech guy" who enjoys sharing home security and automation tips with others.