Buying a home for the first time can be incredibly stressful, mostly due to the plethora of information to sort through, steps and paperwork required, and many different homes available to pick and choose from.
In order to ensure the best experience possible when searching for and buying a first home, it’s best to prepare yourself for all the steps involved.
From getting a mortgage loan with a great rate to hiring a realtor and closing on a home at the right price, there are a lot of steps that go into buying a home for the first time. Read up on some of our tips for first time homebuyers and ensure you’re prepared.
Research Homes
The first step to buying a home for the first time is not only researching the type of home you’d like to live in, but also learning more about local neighborhoods and the real estate market.
Do some research on your own to establish what criteria is essential in your first home. This tactic will help you narrow down your search and help anyone else, such as a real estate agent, point you in the right direction.
While searching for homes, you may also discover that there are features that you don’t necessarily need and are willing to give up, while other items are deal-breakers that you are willing to pay more or sacrifice to have.
The longer and more detailed your searches become, the better an idea you’ll get for the homes that are available in your desired area.
Prioritize Financial Health
Before buying a home, it’s essential that you get your credit score in a good place (above 720) to ensure you qualify for the best possible mortgage rate. Don’t make any large purchases or take on any major debt that would affect your rate in the 6-months prior to buying a home.
Make sure you’re ready for the type and price of home that you are looking for and keep your savings accessible in a high yield savings account.
Ensure that you can afford the homes at the price level that you are looking for. Calculate what monthly payments would be and consider other factors such as the cost of homeowner’s insurance, flood insurance, and annual property taxes.
Review Loan Programs
Check out federal and state programs for first time home buyers, so you receive all the perks available to you and are able to finance your home. Most people do not purchase a home using cash. According to the National Associate of Realtors, about 90% of people take out mortgages to purchase their homes.
There are special tax-breaks, first-time homebuyer mortgage loans, and more financing options to make purchasing a home easier for first time buyers. Learn about different types of home loans and select the type that makes the most sense for your situation.
Most people are told that they need to have at least 20% of the home value for a down payment, however for first time homebuyers that number is much lower–with an average down payment of only six percent. There are also first-time home buyer loans that allow you to put even less money down on a home if you qualify, usually between 0–3%.
The most popular types of home loans are:
- The conventional home loan
- The Federal Housing Administration (FHA) home loan
- The Department of Veterans Affairs (VA) home loan
- The U.S. Department of Agriculture (USDA) home loan
Get Pre-Approved
Have your financing and preapproval in place. Ideally you would have a mortgage pre-approval before even seeing any homes, but the home buying process can take time and many people are excited to start searching right away.
Having mortgage pre-approval before setting your sights on a house ensures that you are ready to jump on an offer right away and don’t risk losing out on the home to another buyer or drawing the process out.
Determine how much you are approved and then calculate how much you actually can afford and are willing to spend on a home. Many times, potential buyers are approved for more mortgage than they need. Contact multiple mortgage lenders before you make a final decision so you can shop around for the lowest rates.
Here’s a helpful article with various lenders to help start your research and find your best fit.
Hire A Local Realtor
Hiring a realtor is one of the best decisions you can make when buying a home for the first time, since they can help you prepare all the necessary documents, negotiate with sellers, and find the perfect house.
A local realtor will help you avoid making an expensive mistake, such as paying too much for a home, buying a home that requires expensive repairs, or buying the wrong home in the wrong location. Share your list of must-haves with your realtor, so they can help you locate homes that meet your needs and are in your price range.
Once you’ve found a home you want to buy, a realtor can help you with the purchase process. From getting a loan and completing necessary paperwork to making an offer and negotiating with sellers, a realtor is there to represent your best interest and ensure the buying process goes smoothly.
Utilize Your Agent
Once you are serious about buying a home, don’t walk into an open house without an agent, or at least the contact information of your agent on hand.
You don’t want to start speaking to a seller’s agent and get into the details without your agent there to guide you or offer advice.
Likewise, other buyers may have their agent ready to submit an offer for them, and you could miss out on the perfect home if you aren’t prepared to do the same.
Find A Home
Have your realtor look and show you relevant homes in desired neighborhoods, but keep an open mind.
Hot real estate markets require fast decision making and you may need to submit relevant paperwork and an offer the same day you see a home you love.
Is it more important that you live near the water or that your home has a certain number of bedrooms? Does price matter more or is the commute time to work or the beach more important? Weigh your options with input from a realtor about what the current real estate market looks like in your desired area.
Submit an Offer
Once you’ve found a home that checks all the boxes, make an offer and be prepared to negotiate.
Different real estate markets will dictate whether you can negotiate the price of a home down, or need to act fast to snag a home at or above its list price.
Realtor can help you find a price that is likely to get you the home you want and include other aspects and fees in the final prices that you may not have considered–such as closing costs, inspection costs, fees, and more.
Get an Inspection
To ensure there are no underlying issues with the home you want to buy, it’s essential to get a home inspection from a trusted, neutral professional.
Get an inspection and weigh the costs of any repairs or damage, even if the house is your “dream home”. Even if your mortgage lender doesn’t require an inspection, you should get one for yourself and your own peace of mind.
Your realtor can help you find and hire an inspector who will determine if there are any major issues, such as structural damage or systemic problems that would be more trouble than the home is worth.
Decide If It’s the One
Once you’ve found a home you love, secured financing, and gotten an inspection, it’s time to close on the home or move on to the next.
It can be a frustrating and even demoralizing process to find a home and then realize that it isn’t the right fit for you, would require too much work, or it has already been taken by another buyer.
It’s important to have a list of criteria for a home, consult your real estate agent, and keep an open mind. You might find the home of your dreams!
Close the Deal
The final step in buying a home for the first time is the closing. The closing isn’t one event or day of signing paperwork, but instead consists of several steps to finalize the sale of the home and approval of finances.
The closing is handled by a neutral third-party closing agent, typically a title company or real estate attorney. Closings involve a lot of paperwork and can it can take several weeks to finalize the sale of a home.
Major home closing events include:
- A home’s title and the keys are transferred from seller to buyer
- The proceeds of the sale are distributed to the seller
- If the home is financed, the buyers sign the mortgage note
- The buyer and seller pay other fees (real estate commissions, title insurance, pro-rated property taxes, escrow fees and closing costs)
- The deed is registered with the city or county
Some items are pro-rated or split between the buyer and seller according to negotiated terms and length of use at closing. Some of the most commonly pro-rated items include taxes, insurance, and HOA fees, if applicable.
Once the dust has settled and all the paperwork is complete, you’re the owner of a new home and ready to move in!
Find Your Perfect Home
Find the right home at the right price for you, including all the neighborhood amenities that matter and your must-haves. Contact the experienced agents at the Gulf Living Group to get started searching, today! We help you navigate every aspect of buying a home for the first time.