Essential Steps to Buy Your First Home
Maybe the idea to buy your first home seems like a long-term possibility, or perhaps you’ve decided to actively start looking. Whatever stage of home buying you’re at, there are specific steps you need to take to insure your buying experience is successful. Follow along with our easy step-by-step guide, so you know you’re informed and feeling confident about your first-time homebuyer experience.
Step 1: Market Research
If you want to buy your first home to become a possibility for you, start keeping an eye on local real estate trends. This will help you prepare for what to expect in your market and determine whether home prices typically drop before they sell or how long the properties you’d be interested in stay on the market.
Step 2: Managing Finances as a First-time Homeowner
Before you fall in love with a specific home, figure out what’s reasonable for you to pay per month. Keep in mind that there are a variety of additional expenses associated with owning your own property that will be new to you if you’ve only been renting so far. You might think of your monthly mortgage payment as your rent, but in reality, it’s more like a portion of rent. You’ll need to factor in your home insurance, property tax, Homeowners Association Fees (if applicable), condo fees, and utilities. All of that together is a closer approximation to your rent payment, so make sure you’re accounting for all of the additional costs on top of your mortgage payments.
Once you know your budget, work with your bank or mortgage broker to get pre-approved for a specific amount. This means that when you find a property within your budget, you’ll be certain that you’ll be able to get the financing for it. Pre-approval gives you and your potential seller confidence and can make it more likely that you’ll be chosen to move forward if you’re competing with other buyers that are not pre-approved.
Step 3: The Role of Mortgage in Home Buying
Finding a great real estate agent that works well with you is key to finding a great place. Yes, you can look on your own, but agents have a lot more line of sight than you do and a keen eye for what might work for you that you might have been passed over without considering.
Step 4: Put an Offer In
You’ve been pre-approved, and your stellar real estate agent has found a hidden gem that you’re absolutely in love with – now what? Now it’s time to have your agent put an offer in. Depending on the market you’re in, your real estate agent will let you know if you should expect a counter-offer, how much competition there is (or isn’t), and what your next steps will look like.
Best case, your offer is accepted! Then you’re off to the final steps.
Step 5: Get a Home Inspection
Let’s be honest. Getting a home inspection can be nerve-wracking. You’re already invested enough in buying this home to have put an offer in, and you really, really don’t want anything critical to be wrong. Try to keep in mind that even if there is a dealbreaker, you’ll be glad in the long run that you found out early, even if it means you have to pass over this property. Chances are, you’ll be fine!
A home inspector is like your guardian angel, looking into the future and seeing all of the places that might cause you grief. They have a long list of what they’ll look for in your potential new property, all things that are essential to ensuring that you have a safe and well-built place to call home. They’ll be particular, and you want them to be. That eagle eye can save you from dealing with costly electrical issues or replacing your roof inside of two years.
Step 6: Choose Your Loan & Get an Appraisal
Hurray, your place passed inspection! Now you’ll need to choose a mortgage type. This is a very personal choice based on your priorities and how long you’re planning to be in your new home. Talk to a mortgage professional you trust, and make sure you’re honest with them about what you need and what’s doable for you. Your lender will send an appraiser to the property you want the loan for – this is their way of guaranteeing they are lending an amount of money they can justify. Once your appraisal is in, and your mortgage is finalized, you’re almost there.
Step 7: Finalize Paperwork & Close!
Depending on what state you’re in, this part of the process varies. In all cases, you’ll have a mountain of paperwork to perfect your signature on and an official close and possession date. Don’t worry, your real estate agent will be there to guide you through everything.
Now is the most exciting part. You’ve followed the steps and are about to have your very own home, and that’s something to celebrate, so cheers to you!
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