If you’ve been looking into buying your first home, you’re probably feeling a bit overwhelmed. The bad news is that home buying is a complicated and tricky process no matter what. Even if you’ve done it before, you’d still be overwhelmed.
But the good news is, we’re here to help you with that. What follows is a complete yet concise how-to guide for the first-time home buyer.
It includes every step of the process from prepping your finances to the closing negotiations. Just read on to learn all you need to know about buying your dream home.
1. Prepare Your Finances
First, you need to get your finances prepared for getting a mortgage. There are two parts to this: building your savings and building your credit.
You will need thousands of dollars in your savings for a downpayment, a home inspection, and any upfront closing costs. And a good credit score will increase your chances of getting approved for a loan. It should also earn you a lower interest rate.
2. Research Financial Aid Programs
There are federal aid programs available for first-time home buyers as well as state programs. These change over time and they also vary by location. So you’ll need to do some research to find out which programs are available to you.
3. Determine Your Maximum Loan Amount
Your maximum loan amount depends on:
- How much financial aid you can get
- Your downpayment amount
- The interest rate you’re approved for
- Your monthly income/non-housing expenses
These factors are first used to determine what amount you can afford to pay each month for your mortgage payment. And that limits how much you can borrow, given the length of the repayment term.
4. Get a Real Estate Agent
While there’s an ongoing debate over whether you really need a real estate agent or not, we say, “Yes.” They want to get you a house fast because that’s how they get paid. And the quickest way they can do that is to genuinely guide you to a house/deal you’re happy with.
Besides, they’re an expert and you’re not.
5. Search For Homes
Now, search online for homes. Put in the search parameters of your required square-footage/amenities and a few thousand dollars less than you’re maximum loan amount. Also, check out your real estate agent’s recommendations.
6. Visit Potential Homes in Person
You need to view the potential home’s in person. the property may be very different than it seemed in the listing photos.
While you’re viewing, put in your bid. Bid lower than your maximum loan amount in case the buyer tries to haggle.
8. Pay For a Home Inspection/Appraisal
You can’t tell the true condition of a house by viewing it. Only a professional home inspector can do this.
Always pay for a professional home inspection before you buy. Additionally, your lender will probably require that you get the home appraised as well.
9. Finish Negotiations and Close
The inspection usually identifies certain repair needs and other issues. Thus, you and the seller must negotiate to decide who will take care of these issues and how. Once negotiations are complete, you’ll close by signing a pile of official documents.
10. Don’t Forget to Get Insurance
What if a pipe bursts the very day you move in? After all the upfront expenses of buying and moving, you don’t want to get stuck with sudden, out-of-pocket repairs, too.
Before you close, make sure you get affordable, comprehensive insurance coverage. Go here to learn more about comparing home insurance quotes online.
Keep This First-Time Home Buyer Guide
Follow these first-time home buyer tips to successfully navigate through the real estate market. To that point, keep this guide bookmarked for reference so that you don’t miss a step.
Next, check out our guides on improving appraisal value, avoiding common home buyer errors, and more. Find these and other helpful posts on our Real Estate blog under the Lifestyle tab in the menu bar.