There are many milestones that people have to cross in life, and one of them is purchasing a home. While many people dream of their perfect home, there is a lot that goes into the process before you can finally begin living in it. For first-time buyers, the entire process may even be intimidating since they might not know everything they need to do and if they’ve made the right decisions at the end of the day.
To avoid making any mistakes and ensure a smooth transaction that ends with the keys to your new house, here are some steps that you can follow:
1. Check Your Finances
Before starting the search for your dream home and falling in love, seriously examine your savings. Since you’re making a significant investment, you will need to be prepared for expenses that come with buying and maintaining a new home.
Have a look at your savings and think about if you have emergency savings for a few months, which can be your backup to keep your home running after the initial purchase. You will have to pay upfront costs, such as down payments and costs, before you can get your hands on your new home.
2. Figure Out Your Credit Score
Once you’ve had a look at your finances, another significant step to take is to understand your credit score because it will affect your chances of receiving a loan. If you have to apply for a loan, your mortgage lender will want to check your finances and your credit score, so you should be a step ahead of them before applying.
Your credit score is tallied based on your payment of bills and your debt-to-income ratio. Before you get into the process, you will need to access your credit report. If you have a high credit score, you will have a chance at a better interest rate compared to someone with a lower one.
3. Think About A Home That Suits Your Needs
There are plenty of homes in the real estate market, ranging from condos to duplexes, townhouses, and traditional single-family homes. However, every option has its benefits and drawbacks depending on your preferences and goals. So, while you may have big expectations, think about the home you require realistically and what will make life easier for you and your family.
While looking for your dream home, you may come across homes that seem great, have a low cost, but also require repairs. It might seem like a great bargain at first, but you may end up losing a lot more money, time, and effort to make it livable or perfect again.
4. Decide Your Budget for a Home
It is recommended that your new home shouldn’t cost more than four or five times your annual income if you have a moderate sum of debt and plan to pay a higher down payment.
While some mortgage lenders won’t want to lend you higher amounts, some will be willing to give you a larger sum if you have a good credit score and financial history. However, you shouldn’t accept it just because they’re offering; making this mistake will leave you in debt.
When you’re considering a price for a home, have a look at the total value of the home, the monthly payments, property taxes, homeowner’s insurance, and if any repairs are required.
5. Get Some Help
Consider hiring a professional real estate agent because they can help find homes for you according to your preferences and arrange meetings or visits during open houses.
They can check out nearby listings based on your preferences, negotiate prices when you settle on a home, help you apply for a loan, and fill out paperwork. A real estate agent is bound by their duties to complete their jobs, keeping you in mind, and they will receive their commission from the seller.
6. Keep Your Pre-Approval Letter
Once you’ve settled on a mortgage amount with your lender, ask them to provide you with a pre-approval letter. When shopping for homes, buyers will want to see this letter to weed out serious buyers from those that are simply window shopping.
7. Shop for Homes and Make Offers
Once you’ve received your pre-approval letter and find homes to your liking, ask your real estate agent to take you to open houses. When you’re visiting homes, make sure to note the plumbing, electrical systems, and doors and windows to see if they move smoothly. You should also check for cracks and other spots that need repairs.
If the home meets all your needs, such as regular maintenance and convenience to schools, offices, or other amenities, ask your real estate agent to figure out a price based on homes in the neighborhood. After you’ve reached an agreement, the home will then move into escrow until the home inspection and closing process is completed.
8. Get Ready to Close
Once the home is placed in escrow, a home inspection will be carried out to check if there are any issues with the property. If there are any issues in the finding, you can renegotiate your offer and lower the price depending on how large the problem is and how much money will be required to fix the problem.
After the inspection is complete and an appraisal is arranged, you will have to complete the final set of paperwork that transfers the home to your own. Then, once your loan is funded and the seller receives your check, you’re free to move into your new house!
Be Prepared in Advance
Buying a home is a significant investment and can take a toll if you’re a first-time buyer. While your real estate agent can help smooth over the process, it is vital to research your own and stay prepared to avoid stress and complete the transaction. Then, once you’ve finally purchased your new home, you can celebrate a new milestone in your life.
Have Questions? Ask The Lott Group
Your real estate agent is the best source of information about the local community and real estate topics. Give The Lott Group a call at 623-313-1158 to learn more about local areas, discuss selling a house, or tour available homes for sale.