Buying your first home is one of the largest and most exciting decisions of your life. It’s the beginning of your life’s next chapter. A home is more than just the place you live--it’s a reflection of you. When you choose your first home, you’ll ultimately decide on one that satisfies your needs while also reflecting your personal style.
Whether see yourself in a lived-in, older style with built-ins that carry their own unique charm, or a newer construction with a minimalist design that can serve as a blank canvas for your inner interior decorator, there are a few--but very important items--to consider before you can move in.
1. Get Home Loan Pre-approval
Unless you are fortunate enough to have an enormous amount of cash lying around, you’ll need to apply for a home loan, or mortgage. Visiting a mortgage lender is a good place to start. Mortgage lenders will take into consideration your income, desired down payment, credit score, debt, insurance costs, and other factors to pre-qualify you and determine a loan amount they’d be comfortable offering. Many lenders want a down payment of 20%, but will take less depending on your credit score. According to Bankrate.com, your mortgage should never be more than 28% of your monthly income. The higher your down payment and credit score, the lower your interest rate and payments could be. Also, remember to approach multiple lenders to try and obtain the best offer. Once you decide on your preferred loan, you will receive the pre-approval paperwork from the lender, which means your information has been verified and your loan authorized. Now you can begin your look for a new home knowing the amount you have to spend. We suggest contacting Prosperity Home Mortgage to help you get started on a new home loan, but there are other options including your own local bank or credit union.
2. Decide on your Home Requirements
Now that you know the maximum amount you have to spend, it’s time to determine the things you need in a home versus things that you would like, but could live without. This will allow you to narrow your search and also provide a realtor with a starting point. If you intend to start a family, you might need a bigger home with an extra bedroom or more living space. Proximity to your workplace, school, or to a family member might be essential to you. There may be certain neighborhoods you want to be in and others you absolutely do not. You may also need a yard or nearby park for your pets. Weighing these needs against wants, such as fireplace, balcony, or bay windows, along with factoring in price will help your realtor find the best homes for you to consider.
3. Team with a Realtor for the Home Search
Now that you know what you need in a home - it’s time to find a realtor to help you find it! Real estate agents are tapped in to the local real estate market and have access to information about homes that may not be easily found or readily available to you. They can help guide you away from homes that that may have complicated legal issues like liens or unpaid taxes, or problematic construction history that may cost you in the future. Since they know the area, they can often negotiate prices down with the homeowner. They act as a buffer between you and the seller, protecting your best interests. A real estate agent can set up viewings with the seller and be there to ensure the seller is prepared, and that you see everything the home has to offer. They will help you ask all of the right questions to gain a complete picture of the home. Plus, they will also handle all of the paperwork necessary to complete a bid and an eventual closing, saving you time and keeping you from overlooking anything vital to the sale.
Although a real estate agent takes care of so much for you, make sure you also do some of your own legwork. Explore neighborhoods, talk to prospective neighbors and research traffic conditions, crime rates, and school ratings.
4. Make an Offer on a Home
When you find the right house, you usually know it the moment you walk in—it just feels like home. But don’t let emotion get the better of you. Inform your agent that you want to make an offer; your agent’s job is just beginning. Now the negotiations begin, and real estate agents are adept at not just coming to a fair price, but also including terms such as having the seller responsible for closing costs. Real estate agents know that some sellers price their homes high, knowing the final selling price will often be negotiated lower. Another thing to consider is title insurance and/or real estate insurance to protect the transaction from unforeseen circumstances. And don’t forget to get a home inspection upon placing your offer.
5. Close and Move In
Once your offer is accepted, there will be a period of time between for you to conduct any inspections you made the home purchase contingent on. The title company will conduct necessary surveys, title searches and any financing contingencies will be worked on by your lender (if applicable). The final culmination of the purchase will then take place (called settlement or closing) at which time papers will be signed, funds will be transferred and you will receive the keys as the buyer – it’s when the house officially becomes yours! After settlement, you can move all of your belongings in and the fun of personalizing your new home begins.