Buying your first home can be a terrifying and exhilarating experience. If you’ve never gone through the process, it seems mysterious and foreboding. With the real estate market slowing down all over the United States, though, now may be a great time to buy.
First, find a mortgage broker in order to gain pre-qualification or pre-approval. Why go through the pre-approval process? Because you don’t want to fall in love with a property before finding out whether or not you can afford it. Pre-qualifying is fairly easy, usually consisting of a credit check and income verification. Your mortgage broker will then let you know how much you can borrow, and what an average mortgage payment will be. When deciding how much of a mortgage payment will fit your budget, remember that you will also be responsible for property taxes and any homeowner association fees. Remember, too, that you’ll be able to write property taxes off when it comes time to pay income tax in April. Also, note that pre-qualifying means only that you’re eligible to borrow a certain amount of money, not that the loan actually exists.
While you’re going through the pre-qualification process, decide what neighborhood you would like to live in. Do you want all-new construction, or a historical house? Do you need to live near a highway or public transportation? If you have children or plan on having them while you live in the house you choose, research the school district. Search the internet for crime statistics, too. Also, check out the average home values in the area. You probably won’t be living there forever, so check to make sure that you’re not buying in a neighborhood that’s losing value, or you might not get a good return when you decide to sell later on down the road.
After you pick a neighborhood, you can decide whether or not you want to work with a buyer’s agent. If you are not familiar with the area or there are many homes you want to see, a buyer’s agent would be a good idea, as he or she will have access to a multiple listing service (MLS) database and the time to schedule home viewings. A buyer’s agent will be able to find more homes with your specifications that you may not have seen, as well.
Once you find a buyer’s agent, it’s time to find a house! Decide what features you absolutely must have. Do you need two or three bedrooms? Two bathrooms or will one or one and a half baths suffice? Do you entertain a lot? If so, you’ll probably want a big kitchen, but if you’re allergic to the stove then you might want more living area. Also, decide how much work you’re willing to do on a house. Do you want to move in and be settled immediately or are you willing to paint, resand hardwood floors, and replace carpet? Decide which amenities you must have and which you are willing do compromise on before you ever step foot in a house. If there’s a feature that gives you pause, take heed of your instinct. Remember, you’ll probably be selling the house again one day, so if something is weird or strange, it might hinder your resale efforts. Just because you can live with it doesn’t mean that a buyer will.
Have fun looking at homes! You’ll see some beautiful homes and some terrible ones. You’ll also be able to get some decorating ideas, even if you’d never step foot in the house again.
Looking at many homes all at once can be tiring. Take a digital camera and take many pictures, because you’ll definitely forget some details. With a photographic record, you’ll be able to go back when you’re less overwhelmed and decide which homes you want to see again.
Once you’ve decided to make an offer on a home, your agent will provide you with information on comparable homes in the area. This allows you decide a fair offer to extend. A buyer’s agent will be able to help you complete all contracts with your seller, and will act as a conduit between you and the seller to make sure that everyone’s offers and compromises are satisfied. If you and the buyer can come to a mutually agreeable amount of money, then your offer will be accepted and a closing date will be set. At this point, you will need to provide an earnest money check, which is typically one percent of the purchase price of the home. You will get credit for this check at closing.
When your offer is accepted, you will probably be terrified , at least for a few hours or days. After all, this is the single biggest purchase that you’ll make in your life. It’s natural to feel some anxiety. Examine your feelings and remember that pretty soon you’ll be so busy packing that you won’t have time to worry.
At this point, your mortgage broker will come back into the picture. He or she will need documentation of your income and expenses. You’ll need to make a lot of copies – of W2s, pay stubs , bank statements and driver’s licenses. You’ll also need to fill out a loan application. All of this information lets the lender know that you’re able to afford the home you want to purchase. The mortgage broker will be able to give you an estimate of your closing costs, but the exact amount you’ll have to pay at closing won’t be ready until the day or two before you close.
Next, you’ll need to schedule a home inspection. To find an inspector, ask your friends or neighbors for a recommendation. Check your inspector’s references. If you’re satisfied, then your agent can schedule a time for you to meet the inspector. A good inspector will the scrutinize the outside of your new home as well as inside. Ask questions of your inspector! When you move in, you’ll need to know how to use the thermostat, the age and condition of your water heater, and the location of the breaker box. Your inspector will give you a report of the house’s condition that includes any suggested repairs. At this point, you can negotiate with the current home owner to ensure everything is in good working condition when you move in.
After you’ve finished the inspection, it’s all over but the closing! You’ll spend the next few weeks packing and getting ready to move into your new home. Soon, all the stress of the previous few weeks will be a thing of the past, and you’ll wonder what you ever worried about. Enjoy your new home!
