Being a first-time home buyer can be overwhelming. There are so many steps and processes that seemingly all happen at once! Don't worry. We broke down the process into three easy stages to help you ease into the process.
Looking for the Right Fit
Decide on Your Ideal Location
Deciding on a location may be more important for some buyers than others. Is it important for you to be within walking distance of a school? Do you want to live downtown? Would you prefer a house in the country? Whatever your preferences, define your ideal location and consider which qualities are the most important to you.
Go to Open Houses
Going to open houses is a great way to get a feel for what you want in a home. You may surprise yourself! Check out the neighborhood and the maintenance of the homes surrounding.
Consider Future Needs
First, think about how long you intend on living in the house you're looking for. Whatever amount of time it may be, you should ensure that the home will be able to fit the basic needs of that timeline. For example, if you are newlyweds, looking to buy a house you intend on keeping for ten years, you may want to factor in a room or two for potential kids. Other things to consider are how much storage space will you need, what kind of garage or how large would you like your yard to be?
Sorting out Your Finances
Check Your Credit
Knowing your credit score before applying for a mortgage is key. Your credit score will influence what kind of interest rate you receive on your loan.
Don't worry, this doesn't mean you are applying for a loan. It is simply a process to find out what loan you would be eligible for. This includes the an estimated interest rate, terms and conditions, and a loan amount. It is something you should do early, so you know your price range.
Discover Loan Options
There are three main choices for a loan. The loan type, the loan length, and the interest rate. The Federal Housing Administration loan is very popular among first time home buyers due to its small down payment requirement (3.5%). Do your research and become familiar with the pros and cons of different loans so you can make an educated decision when the time comes.
Saving for a Down Payment
Depending on what loan you decide to get, your down payment will vary. Some people prefer to save up and put down 20%, however, this is not a requirement. The amount required for a down payment will vary from loan to loan.
Account for Closing Costs
Many first time home buyers forget about these costs. Closing costs can be anywhere from $3,000 to $7,500 (Zillow).
Shop Around for Home Insurance
Before you choose the same company that ensures your car, do some research. Take a look at at least three different sources and compare their coverage. Ask around and take a look at reviews! Having decent homeowners insurance is important, regardless of where you live!
Plan for Future Updates
While the home inspection should bring to light anything that needs to be fixed right away, you need to consider what updates may need to be made in the future. A few things you could plan to update or maintain are water heaters, furnaces, roof, and of course any rooms you plan on modifying. Be sure you keep these in your mind when considering your budget!
Making an Offer
Consult with Your Agent
You will want to have an agent helping you, so try not to be too worried. They understand the market and will know what to offer.
Be Ready to Negotiate
Many homes are bought below listing price. Some sellers are motivated to sell quickly if they are moving, already own another home, or their personal situation has changed. Get your limits set in your mind and be ready to negotiate.
Get a Home Inspection
Be sure you are choosing an inspector that has a good reputation. Once the inspection is complete, read the report thoroughly. If the report reveals any bad news, talk with your agent immediately to discuss your options. If all comes back well, you can proceed with the buying process!
Look into a Home Warranty
For that extra bit of comfort, you may want to purchase a home warranty. A home warranty is a yearly service contract that protects specific home systems and appliances.
Are you looking for a realtor to walk beside you and help you with this big decision? Look no further, Jessica and Sarah are ready to help you become homeowners! Contact us today to get started on the home buying process.
For more information on how the home buying process works, check out our recent blog!